There is some positive news from Asia to cheer up on the global economy to lift sentiments at least to some extent. The two biggest markets in the region China and India have delivered some of the economic indicators that should go well with the market sentiments.
While China has witnessed higher than expected new factory orders for February, new orders in India reached a ten-month high in February though its manufacturing segment growth eased in February from January.
The latest news comes on the heels of European Central Bank's allotment of $712.4 billion to 800 banks for a three year period. It is expected to ease the credit crunch faced in European Union and accelerate the sluggishness. The region need much needed boost from the ECB to awaken its economic activities, which has been facing rough weather during the last few quarters.
Yesterday, Bernanke viewed modest growth during the last two months and provided no indication of quantitative easing for the third time in an effort to lift the economy. The latest news from Asia, especially from China, should be a boost for the global economic resilience to some extent.
China's purchasing mangers index (PMI) for February rose to 51.0 from 50.5 in January. Economists were expecting PMI reading of 50.7 – 50.8. Still, some of the smaller companies from China are yet to catch up with larger ones.
The growth in HSBC's China PMI is significant as it grew to 49.6 from 48.8 though the reading is below the threshold point of 50 for indicating expansion.
Production index in China advanced to 53.8 from 53.6 in January, while purchasing price index grew four percentage points to 54 in February. For Q4 2011, China's GDP grew 8.9 percent; its slowest growth rate in two years, due to weak demand from external factors apart from China's tightening of inflationary measures.
Despite these positive indicators, there are economists who believe that PMI data for January and February always indicate growth given the last six years performance as the month comes after Chinese New Year. Therefore, these economists warn not to read too much from these data.
India's manufacturing sector growth eased in February to 56.6 from 57.5 in January. The saving grace is the new orders reached ten-month high. Also, its GDP for the third quarter ended December 2011 touched the slowest rate in three years to 6.1 percent from 6.9 percent in the second quarter and 7.7 percent in the first quarter, primarily due to slow down in mining and manufacturing sector.
India's GDP slowed primarily on account of higher interest rates to limit inflationary pressures.But, inflation has started easing and Reserve Bank of India has already initiated steps to reduce cash reserve ratio to allow more liquidity into the system to stimulate growth.
Though lowering of interest rates in India before March looks unlikely, there is every possibility of RBI resorting to such a move during the second half of 2012 to spur economic growth.
Though these positive factors are not going to reflect anything significant during the first two quarters of 2012, but are essential indicators for growth during the second half of 2012.