SHANGHAI – China's manufacturing accelerated in March as the dampening impact of winter weather and a long holiday the previous month eased and both exports and domestic sales recovered, two surveys showed Thursday.
The state-affiliated China Federation of Logistics and Purchasing said its purchasing managers index, or PMI, rose to 55.1 in March from 52 in February. Numbers above 50 show manufacturing activity expanding. The index has remained above 50 for 13 straight months after a slowdown in late 2008 and early 2009.
The PMI for January was 55.8. But a long holiday for the Lunar New Year, coupled with unusually cold, snowy weather slowed activity in February.
A separate index issued by HSBC Corp. climbed to 57.0 in March, up from 55.8 in February but still below its reading of 57.6 in January.
For the first quarter, overall growth of the manufacturing sector was the fastest since the survey began April 2004, the report said.
"Backlogs were accumulated at a marked rate in March as manufacturers continued to find it increasingly difficult to complete both existing and new contracts," it said.
The report noted that manufacturers were raising prices of finished goods to preserve profit margins as the cost of oil, steel and other raw materials rose.
March represents a return to normal growth, Jing Ulrich, chairwoman of China equities for J.P.Morgan, said in a comment on the government-sponsored survey.
"Industrial activity will likely be supported by recovery in external demand and strengthening private consumption," she said. She noted that slowing was to be expected, however, due to government efforts to rein in bank lending and control inflation.
Electric power demand, another key indicator of industrial activity, rose 26 percent in January-February period from a year earlier, with industrial power demand up 30 percent, according to the China Electricity Council.
TOKYO – Confidence at Japanese companies rose for a fourth straight quarter amid growing faith in the global economic recovery, a key central bank report showed Thursday.
In the Bank of Japan's quarterly "tankan" survey of business sentiment, the main index for large manufacturers stood at minus 14, an 11-point improvement from three months ago.
The figure represents the percentage of companies saying business conditions are good minus those saying conditions are unfavorable. So the higher the number, the better the mood.
The reading narrowly missed Kyodo News agency's average market forecast of minus 13. Sentiment among big non-manufacturers also improved to minus 14 from minus 21 in December.
The tankan helps the central bank guide monetary policy and is a closely watched barometer of the country's economic health. The latest results confirm the Bank of Japan's relatively upbeat assessment of the world's second-biggest economy. Gov. Masaaki Shirakawa said last month that stimulus measures at home and abroad are working, bolstering exports, production and consumer spending.
The data could convince the central bank's policy board to refrain from easing monetary policy further when it meets next week. At its last meeting in March, members voted to increase liquidity by expanding a low-interest loan program to banks. The move came amid growing political pressure to escalate the fight against deepening deflation.
The central bank says it does not tolerate deflation but expects prices to head south for the next couple of years. Lower prices may seem like a good thing, but deflation can hamstring economic growth by depressing company profits, sparking wage cuts and causing consumers to postpone purchases. It may also increase debt burdens.
The Bank of Japan surveyed a total of 11,528 companies between Feb. 23 and March 31 and almost 99 percent responded.
The mood among medium-size and small companies brightened, though their business conditions continued to lag. Medium-size manufacturers' confidence rose to minus 19 from minus 28, and the small manufacturers' index rose to minus 30 from minus 41.
The survey also showed that big companies plan to reduce capital investments by 0.4 percent in the new fiscal year, which started Thursday.
Although respondents said they still had too much capacity and too many workers, the excesses retreated from three months ago, pointing to an improving labor market. The country's unemployment rate in February was unchanged at 4.9 percent.
Companies are assuming that the dollar will average 91 yen this fiscal year. Large companies expect net profit to rise 48 percent in the year through March 2011.
WASHINGTON – Reversing a ban on oil drilling off most U.S. shores, President Barack Obama on Wednesday announced an expansive new policy that could put oil and natural gas platforms in waters along the southern Atlantic coastline, the eastern Gulf of Mexico and part of Alaska.
Speaking at Andrews air base outside Washington, Obama said, "This is not a decision that I've made lightly." He addressed the expected outcry from disappointed environmentalists by saying he had studied the issue for more than a year and concluded it was the right call given the nation's voracious thirst for energy and the need to produce jobs and keep American businesses competitive.
"We're announcing the expansion of offshore oil and gas exploration but in ways that balance the need to harness domestic energy resources and the need to protect America's natural resources," Obama said, according to his prepared remarks released in advance by the White House. "This announcement is part of a broader strategy that will move us from an economy that runs on fossil fuels and foreign oil to one that relies more on homegrown fuels and clean energy. And the only way this transition will succeed is if it strengthens our economy in the short term and long term."
He added: "To fail to recognize this reality would be a mistake."
Obama made no secret of the fact that one factor in his decision was securing Republican support for a sweeping climate change bill that has languished in Congress. But Obama has long stated his support in favor of the "tough decision" to expand offshore drilling
The plan modifies a ban that for more than 20 years has limited drilling along coastal areas other than the Gulf of Mexico. It allows new oil drilling off Virginia's shoreline and considers it for a large chunk of the Atlantic seaboard. At the same time, he's rejecting some new drilling sites that had been planned in Alaska.