China manufacturing hits 13-month high: HSBC
December 4, 2012, 12:23 am TWN
BEIJING -- Manufacturing activity in China hit a 13-month high in November, HSBC said Monday, in another sign that the world's second largest economy is emerging from a drawn-out slumber.
The banking giant's purchasing managers' index (PMI) for China hit 50.5 last month, up from 49.5 in October, putting it above the 50 mark that indicates growth. A reading below signals contraction.
The figure signals a return to growth after 12 consecutive months of contraction as the crucial manufacturing sector has been hit by a global slowdown as well as the debt crisis in the key market of Europe, where demand for Chinese goods has slumped.
It is the highest reading since October last year, when the figure was 51, according to HSBC data.
China's official PMI reading also showed expansion in November for the second month in a row, hitting 50.6, compared with 50.2 in October and 49.8 in September.
Despite the news, Shanghai's composite index slipped, trading 0.36 percent lower in afternoon trade.
The HSBC index, compiled by information services provider Markit, tracks manufacturing activity and is a closely watched barometer of the health of the economy.
Qu Hongbin, a Hong Kong-based economist with HSBC, said: "This confirms the Chinese economy continues to recover gradually."
The bank expects China's economic growth to pick up modestly to around 8 percent in the fourth quarter as government "easing measures continue to filter through," he added.
New export orders increased at "a market rate," with a number of firms linking the rise to a pick-up in demand, particularly in Europe and the United States, HSBC said.
Tang Jianwei, a Shanghai-based economist for Bank of Communications, tipped conditions to further improve next year.
"Next year the economic outlook will be better, especially with the coming of the Chinese New Year when demand will increase. We will likely see steady improvement in PMI in the next few months," he told AFP.
China's economic growth hit a more than three-year low of 7.4 percent in the third quarter from July to September.
But recent data has fueled optimism that the worst is over. Exports, industrial production, retail sales and fixed asset investment — a key gauge of infrastructure spending — have all shown improvement.
Premier Wen Jiabao and Commerce Minister Chen Deming have both said in recent months that they expect China to achieve its targeted 2012 growth rate of 7.5 percent despite the impact of the global slowdown.
China cut interest rates twice this year and decreased the amount of funds banks must keep in reserve three times since last December to encourage lending.
But it has avoided the kind of huge stimulus package it tabled after the 2008-2009 global financial crisis, which sent inflation soaring.
Economists argue the country faces mounting pressure to restructure its economy to ensure long-term growth, such as reducing its reliance on exports, while boosting domestic consumption.