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China Economy

China PMI reaches 13-month high

PUBLISHED : Friday, 23 November, 2012, 12:00am
UPDATED : Monday, 30 May, 2016, 5:00pm

The mainland economy may be changing gears after a protracted slowdown, according to the latest HSBC Flash Purchasing Managers' Index.

The index shows manufacturing may have surged to a 13-month high in November, offering more hope for a sustained economic recovery.

The index rose to 50.4 this month from 49.5 last month. This is the first time since October 2011 that the gauge has crossed 50. A reading above 50 indicates expansion while that below it shows contraction. The mainland's official PMI, compiled by the Statistics Bureau, for last month was 50.2, from 49.8 in September.

The HSBC reading "confirms that the economic recovery continues to gain momentum towards the year-end", said Qu Hongbin, chief economist for China at HSBC.

"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."

The sub-indices also point to an overall improvement. The output index rose to 51.3, also a 13-month high, compared with October's 48.2, while new export orders surged to 52.4, the highest in two years. Contraction in both employment and backlog of industrial activity slowed.

The Hang Seng Index climbed 1 per cent yesterday to end at the highest since November 7, partly in reaction to the promising PMI figures.

Jing Ulrich, chairman of Global Markets, China at JPMorgan, said that as the economy stabilises, Beijing's new leadership will be "quite cautious about injecting too much liquidity" for fear of stoking inflation or excessive investment.

Barclays Capital predicted that the mainland's economic growth will reach about 7.8 per cent in the fourth quarter, up from 7.4 per cent in the third, and sees the possibility of the economic growth rate next year exceeding its forecast of 7.6 per cent.