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China’s Factory Gauge Unexpectedly Rises to Highest Since 2014

  • Gains not equal as large enterprises improve, small firms drop
  • Hard to tell if good conditions will be sustainable: JPMorgan
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What China's PMI Report Tells Us About the Economy

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China’s official factory gauge unexpectedly rose last month to the highest level in almost two years, suggesting the economy’s stabilization remains intact and that a weakening in July was flood-related and temporary.

Floods across southeastern regions responsible for about a fifth of China’s economic output interrupted production in the summer. The rebound in August gives policy makers breathing space to push ahead with reforms of state-owned firms and cutbacks in overcapacity sectors such as coal and steel. The offshore yuan strengthened while the Australian dollar -- a proxy for China’s economy because of its shipments of raw materials -- climbed.