China’s PMI Rises Faster Than Expected

“China’s manufacturing expanded at a faster pace last month, indicating a recovery in the world’s second-largest economy is sustaining momentum.

The Purchasing Managers’ Index (SHCOMP) was 50.9, the National Bureau of Statistics and China Federation of Logistics and Purchasing said today in Beijing, an 11-month high and up from 50.1 in February. A separate gauge from HSBC Holdings Plc and Markit Economics rose to 51.6 in March from 50.4. Readings above 50 indicate expansion.

Gauges of output and export orders advanced in the official survey while an index of input prices declined, a boost for new Premier Li Keqiang as he seeks to spur expansion without fanning inflation. The March improvement follows the weakest January- February growth for factory output since 2009 and Goldman Sachs Group Inc.’s questioning of the strength of exports.

“We are clearly in a lot better state than we were at the end of last year,” Alistair Thornton, a Beijing-based economist at researcher IHS Inc., said in a Bloomberg Television interview, terming the momentum “modest.” At the same time, the economy faces “fairly large headwinds” including property curbs and tighter supervision of so-called shadow banking, he said.

The government PMI was lower than the 51.2 median estimate of 26 analysts surveyed by Bloomberg News. The HSBC index’s final reading matched the median estimate of 10 analysts. The preliminary level issued March 21 was 51.7.

‘Weak’ Recovery…”

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“Investors are boosting wagers on higher commodity prices at the fastest pace in almost four years, rebounding from the least bullish position since 2009, on signs that the U.S. is accelerating and Europe’s debt crisis is easing.

Hedge funds and other large speculators increased net-long positions across 18 U.S. futures and options by 10 percent to 679,191 contracts in the week ended March 26, data from the Commodity Futures Trading Commission show. The bets surged 67 percent in three weeks, the biggest advance since May 2009. Wagers on higher oil prices climbed the most this year, while those for cattle are at a six-week high.

The Standard & Poor’s GSCI Spot Index of 24 raw materials rebounded 2.1 percent from a 10-week low on March 4 as contracts outstanding jumped 10 percent last quarter, the most in a year. The U.S. economy grew at a faster pace than previously estimated in the fourth quarter, the Commerce Department said March 28. Cypriot President Nicos Anastasiades vowed to keep his nation in the euro on March 29 after it became the fifth country to seek a rescue since the region’s crisis began in 2009.

“Over the last quarter, we’ve seen an improvement in U.S. economic activity far above expectations,” said Chad Morganlander, a Florham Park, New Jersey-based fund manager at Stifel Nicolaus & Co., which oversees about $130 billion of assets. “That has ginned up demand expectations.”

American Spending…”

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“China’s largest cities, including Beijing and Shanghai, tightened rules on home purchases after the nation asked local governments to step up efforts to cool the property market.

Beijing, the capital, banned single-person households from buying more than one residence while Shanghai prohibited banks from giving credit to third-home buyers, according to the local administration websites. The two cities will also enforce a 20 percent tax on capital gains from property sales.

“This will help calm people’s panic about home prices,” said Yi Xianrong, a Beijing-based researcher at the Chinese Academy of Social Sciences, which advises the Cabinet. “At the same time, restrictions on home purchases don’t change the fundamental demand, and it seems the new measures in Beijing are aimed more at short-term problems rather than long-term healthy development of the property market.”

Home prices in the capital jumped 5.9 percent from a year earlier in February, the biggest increase in two years, China’s National Bureau of Statistics said March 18. Costs across the country rose 160 percent in 1998-2011 after ownership passed into private hands, government data show.

The city administration of Shanghai, where new home prices in February rose 3.4 percent from a year earlier, also said it will increase down-payment requirements and interest rates for second-home mortgages. Shenzhen, Guangzhou, Chongqing, Tianjin and Jinan have also published details on the housing curbs.

Shenzhen Measures…”

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“The yen strengthened and Asian shares retreated after a third quarterly advance as economic data from Japan, China and South Korea missed estimates. Commodities declined, while U.S. equity-index futures erased losses and Treasuries retreated.

The yen appreciated 0.5 percent against the dollar at 7:50 a.m. in New York, after declining for a sixth month in March, the longest losing streak in 12 years. The MSCI Asia Pacific Index sank 1.2 percent. Standard & Poor’s 500 Index (SPXL1) futures added less than 0.1 percent after reaching a record last week. The yield on 10-year Treasuries rose three basis points. The S&P GSCI Index of 24 commodities fell 0.6 percent, with copper and oil sliding in New York. Markets in Australia, New Zealand, Hong Kong and most of Europe are closed.

The Bank of Japan’s Tankan index of confidence among large manufacturers improved less than estimated in March, South Korean exports rose 0.4 percent, missing the 1.8 percent gain predicted in a Bloomberg survey, and a pickup in China’s factory output trailed forecasts. Shares retreated today after global stocks beat all other investments for a second quarter in the first three months of the year, the first back-to-back outperformance since 2009.

“We need to see the economy showing signs of improvement and inflation numbers picking up in Japan,” Vasu Menon, head of content and research at OCBC Bank Ltd. in Singapore, said on Bloomberg Television’s On the Move with Rishaad Salamat. “China is recovering, but the recovery is going to be a modest one.”

Yen Gains…”

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