China's November official PMI seen hitting seven-month high as demand revives

Wed Nov 28, 2012 3:02am EST
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BEIJING (Reuters) - China's factory activity in November probably expanded at its fastest pace in seven months, reinforcing views that recovery in the world's second-largest economy is entrenched going into the final quarter of the year.

China's official purchasing managers' index (PMI) in November may have rebounded to 50.6 from October's 50.2, the median estimate of 11 economists polled by Reuters showed, the latest evidence a recovery in the vast manufacturing sector was gathering momentum on the back of a revival in domestic demand.

The 50-point line demarcates accelerating from slowing activity in PMI survey methodology.

"More signs are emerging that the economy is gaining strength and the recovery is durable. Therefore, the market has shown it has high expectations for November economic data," said Nie Wen, an analyst at Hwabao Trust in Shanghai.

"The strong readings of power output and cargo freight in recent weeks also cement this trend," he added.

China's economy has shown positive changes since September, with an array of economic indicators from factory output to retail sales and investment pointing to an uptick in the broader economy, as Beijing's pro-growth policies start to bite.

Analysts said the end of a destocking cycle and a quickening pace of investment would keep driving up domestic demand and extend the recovery trend into the final quarter of this year.

China's annual economic growth dipped to 7.4 percent in the third quarter, slowing for seven quarters in a row and leaving the economy on course for its weakest showing since 1999.

Given recent signs of recovery, many analysts expect the economy to snap out of its longest downward cycle since the global financial crisis and start to trend up in the fourth quarter.   Continued...

An employee checks on a steel product at a steel production factory in Wuhan, Hubei province, August 2, 2012. REUTERS/Stringer