PMI And Government Growth Support Measures Boon For DryShips Inc. (NASDAQ:DRYS)

by Patrice Washington | Monday, Apr 7, 2014 | 735 views

Boston, MA, 04/07/2014 (usastockreports) – A positive (purchasing managers’ index) PMI of China brings good news to DryShips Inc. (NASDAQ:DRYS) and the likes of it. For March, China’s PMI climbed 50.3 as against the previous month’s 50.2, diminishing concerns that the second largest economy in the globe and one of the main drivers of dry bulk shipping industry is going towards a slowdown.

PMI Above Expectation

The PMI figure comes in contrast to the expectations of Economists and analysts, who projected it to come at 50.1. While PMI and other industry drivers continue to be significant to the dry bulk companies, macro fundamentals are also important to be taken note of. Analysts consider the PMI as furnished by National Bureau of Statistics is accurate and gives a clear picture of the economic scenario of the country due to its broader industry coverage. According to the analysts, the PMI of 50 and above reflects that the economy is in expansion and is regarded as positive for medium to long term range.

In March, China’s output increased from 52.6 in February to 52.7 in March, new orders rose to 50.6 against 50.5 and employment numbers too increased from 48 to 48.3, during this period of time. The input and output price components of the official PMI fell substantially, suggesting that the country’s industrial sector might see deflation continue due to excess production and weak prices, but this does not hold negative all the time.

Government’s Step To Help Dry Bulk

Despite of some improvement in the March numbers, economists still consider it weak, based on the fact that activities in China normally pick up post Lunar Holidays and therefore, the current figures echoe the languished economy scenario. Moreover, the level is also perceived as weak by the government, which is taking measures to support growth. The government’s recent announcement to push infrastructure investment is a great news for dry bulk shippers, irrespective of the fact if PMI is taken positive or negative.

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