Chinese manufacturing grows in November: HSBC
By Kelly Olsen, AFP
November 23, 2012, 12:44 pm TWN
BEIJING -- China's manufacturing activity grew in November for the first time in 13 months, HSBC said Thursday, in a further sign of strength in the world's second-largest economy after a marked slowdown.
The preliminary purchasing managers' index (PMI) released by the British banking giant hit 50.4 this month, up from a final 49.5 in October, after 12 consecutive months in negative territory.
A reading above 50 indicates growth in the key sector, while one below signals contraction.
The index, compiled by information services provider Markit and released by HSBC, tracks manufacturing activity and is a closely watched barometer of the health of the economy.
November's figure was the first time since October 2011 that the indicator showed expansion and suggested a revving up in China's economy, where growth has slowed for seven straight quarters.
It comes after China's official purchasing managers' index rose, announced earlier this month, rose to 50.2 in October from 49.8 in September for the first expansion in three months.
"This confirms that the economic recovery continues to gain momentum towards the year end," Qu Hongbin, HSBC's chief economist for China, said in the bank's release announcing the figure.
"However, it is still the early stage of recovery and global economic growth remains fragile. This calls for a continuation of policy easing to strengthen the recovery."
China's economic growth hit a more than three-year low of 7.4 percent in the three months to September, but recent data has fuelled 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.
The rosier outlook comes as China concluded an overhaul of the Communist Party's top leadership last week.
Vice President Xi Jinping took the reigns of the party from President Hu Jintao, whom he is also scheduled to replace as state president in March.
Authorities have cut interest rates twice this year and have also reduced the amount of funds banks must keep in reserve three times since December to encourage lending.
J.P. Morgan economists Zhu Haibin and Grace Ng said that the result of the preliminary November PMI was due to positive effects from Beijing's efforts to prod growth.
They cautioned, however, that the external outlook is still a cause for concern.
"Global demand conditions going into early next year remain uncertain," they wrote in a research note.
The possibility of automatic spending cuts and tax increases in the United States — the so-called fiscal cliff — and the eurozone's ongoing debt problems "remain a key risk factor in China's road of economic recovery going into next year," they said.
HSBC said it would release its final November PMI data on December 3. China's official PMI for November comes out on Dec. 1.