[ForexNews]

The three business surveys (the semi-official PMI, the CLSA PMI, and the MNI China Business Sentiment survey) all improved in April, adding support to the "start of a growth recovery" view. In particular, the CLSA PMI increased sharply, rising above the 50 neutral level for the first time since last August. The new orders indices point to further recovery in production growth in the months ahead.

The semi-official PMI rose further by 1.1 points to 53.5 in April, the second consecutive month it has been above the 50 threshold signalling expansion. The reading suggests that industrial activity continued to grow in April, supported by monetary and fiscal stimulus. Details indicate that the improvement is broad based, with 9 out of the 11 sub-indexes climbing. The production index increased for the third consecutive month to reach 57.4, its highest reading since April 2008. The employment index rose to 50.3, climbing above 50 for the first time since October 2008, after recording a trough of 43.0 in January. The stocks of finished goods component fell further, declining to 44.8 in April from 46.7 in March and 47.7 in February, indicating that manufacturers were still running down inventories.

The new orders index recorded another strong increase, climbing to 56.6 in April from 54.6 in March and 50.4 in February. New export orders continued to improve, with the index rising further to 49.1, only marginally below the expansionary threshold, after having bottomed out at 29.0 in November. This suggests that domestic orders increased strongly from the previous month, while export orders continued to drop, albeit at a slower rate.

The CLSA PMI rose to a seasonally adjusted 50.1 in April from 44.8 in March, above the 50 neutral level for the first time in nine months. The output index rose sharply to 51.3 from 44.3. The new orders index climbed to 50.9 from 43.6, while the export orders index increased to 48.8 from 41.4, indicating stronger domestic demand than external demand. The employment index rose to 50.9 from 47.1, the first expansion in nine months.

The MNI business condition index released earlier increased to 61.2 from 54.2 in March, giving its strongest reading in more than a year (see China: Overall business conditions show significant improvement, 24 April 2009).