Index shows factories backin growth after 13 months
By Wang Yanlin |
November 23, 2012, Friday
|
Print Edition
Print Edition
CHINA'S manufacturing activities may show expansion for the first time in 13 months in November, according to the HSBC Flash China Manufacturing Purchasing Managers' Index, the earliest available indicator of the industrial sector's vitality.
The index climbed to a 13-month high of 50.4 for November, up from October's 49.5 in October, HSBC Holdings Plc said yesterday.
A reading above 50 means expansion, and it was the first time in over a year that the index, slanted towards private and export-oriented firms, bounced back into expansionary territory.
Share prices and oil prices rose following the announcement, indicating bolstered sentiment among global investors.
Qu Hongbin, chief economist for China and co-head of Asian Economic Research at HSBC, said the index confirmed that economic recovery was continuing to gain momentum towards the end of the year.
"However, it is still the early stage of recovery and global economic growth remains fragile," Qu said. "This calls for a continuation of the policy easing to strengthen the recovery."
Barclays economist Chang Jian said the data suggested that the positive signs seen in September and October had been sustained into November with external demand stabilizing and domestic demand improving.
"We expect a moderate rather than a sharp rebound, and continuity, rather than a sudden change in direction, will be the key theme of economic policy-making in the near future," Chang said.
Further improvement
He expected industrial production to improve further this month and fourth-quarter economic growth to pick up to around 7.8 percent from 7.4 percent in the third quarter.
Some analysts have cautioned that a Chinese recovery may turn out to be "L-shaped," meaning the decline might have stopped but improvements in growth would be gradual.
Jing Ulrich, chairwoman of China equities at JP Morgan, said China's economy had improved since May after supportive policies were introduced.
"We are upbeat about the outlook. But there remain a lot of uncertainties, including the European debt crisis and the United States fiscal cliff," Ulrich said. "China needs to maintain a proactive fiscal policy stance and a neutral monetary policy stance to secure the current recovery."
The component indices of the HSBC Flash PMI showed that output expanded to 51.3 in November from 48.2 a month earlier and new export orders rose for the first time since April 2012, while employment contracted at a slower pace.
China's economy showed signs of recovery with better-than-expected performance in September and October. Key growth indicators such as industrial production, retail sales and fixed-asset investment all grew faster while inflation moderated to its slowest since February 2010.
In particular, China's industrial production gained 9.6 percent annually in October, accelerating from 9.2 percent in September and 8.9 percent in August.
The official Purchasing Managers' Index, compiled by the China Federation of Logistics and Purchasing, returned to expansion with a reading of 50.2 in October. The index gives a higher weight to large state-owned enterprises.
The index climbed to a 13-month high of 50.4 for November, up from October's 49.5 in October, HSBC Holdings Plc said yesterday.
A reading above 50 means expansion, and it was the first time in over a year that the index, slanted towards private and export-oriented firms, bounced back into expansionary territory.
Share prices and oil prices rose following the announcement, indicating bolstered sentiment among global investors.
Qu Hongbin, chief economist for China and co-head of Asian Economic Research at HSBC, said the index confirmed that economic recovery was continuing to gain momentum towards the end of the year.
"However, it is still the early stage of recovery and global economic growth remains fragile," Qu said. "This calls for a continuation of the policy easing to strengthen the recovery."
Barclays economist Chang Jian said the data suggested that the positive signs seen in September and October had been sustained into November with external demand stabilizing and domestic demand improving.
"We expect a moderate rather than a sharp rebound, and continuity, rather than a sudden change in direction, will be the key theme of economic policy-making in the near future," Chang said.
Further improvement
He expected industrial production to improve further this month and fourth-quarter economic growth to pick up to around 7.8 percent from 7.4 percent in the third quarter.
Some analysts have cautioned that a Chinese recovery may turn out to be "L-shaped," meaning the decline might have stopped but improvements in growth would be gradual.
Jing Ulrich, chairwoman of China equities at JP Morgan, said China's economy had improved since May after supportive policies were introduced.
"We are upbeat about the outlook. But there remain a lot of uncertainties, including the European debt crisis and the United States fiscal cliff," Ulrich said. "China needs to maintain a proactive fiscal policy stance and a neutral monetary policy stance to secure the current recovery."
The component indices of the HSBC Flash PMI showed that output expanded to 51.3 in November from 48.2 a month earlier and new export orders rose for the first time since April 2012, while employment contracted at a slower pace.
China's economy showed signs of recovery with better-than-expected performance in September and October. Key growth indicators such as industrial production, retail sales and fixed-asset investment all grew faster while inflation moderated to its slowest since February 2010.
In particular, China's industrial production gained 9.6 percent annually in October, accelerating from 9.2 percent in September and 8.9 percent in August.
The official Purchasing Managers' Index, compiled by the China Federation of Logistics and Purchasing, returned to expansion with a reading of 50.2 in October. The index gives a higher weight to large state-owned enterprises.
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