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Power output rise hints at mainland recovery

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Mainland power output increased last month for the first time since October last year, suggesting a recovery in the world's third-biggest economy may be just around the corner.

Power output - a key barometer of economic activity - increased 3.6 per cent year on year last month as a rebound in heavy industry output as well as unseasonably high temperatures drove up demand.

Total power generation reached 309.33 billion kilowatt-hours, Xinhua said, citing figures from the State Grid Corp of China. Power generation surged 7 per cent from a year earlier in the last 10 days of the month.

The increase compared with a 3.5 per cent decline in May and a 3.55 per cent fall in April, reflecting growing consumption on the back of Beijing's 4 trillion yuan (HK$4.54 trillion) economic stimulus package.

'The long-anticipated rebound reflects the recent pick-up in economic activity fuelled primarily by infrastructure investment and thus industrial production,' said Sherman Chan, an economist at Moody's Economy.com.

Power usage had been the missing piece in the country's recovery picture. Despite robust investment and a rebound in manufacturing earlier this year, power generation failed to pick up. Possible explanations included business failures or a sharp slowdown in heavy industry - the biggest power user - during the economic downturn late last year.

The mainland purchasing managers' index released on Wednesday stood at 53.2 points last month, up 0.1 point from May and the fourth consecutive monthly reading above 50, which suggests expansion.

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