Steady China factory growth in November underlines economic resilience

Sun Dec 1, 2013 10:46pm EST
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BEIJING (Reuters) - China's factory growth stabilized in November aided by firm demand, a pair of surveys showed, a sign of resilience in the world's second-largest economy that augurs well for its plans for structural reforms.

The final HSBC/Markit Purchasing Managers' Index (PMI) stood at 50.8 in November, a survey showed on Monday, down a touch from October's 50.9 but up from a preliminary reading of 50.4.

The encouraging outcome echoes an upbeat showing from the official PMI, which clung to an 18-month high of 51.4 in November, ahead of market expectations.

The upbeat results supported the Australian dollar -- a proxy for the Chinese growth engine -- in early Asian trade and heartened investors who worried that China's economic growth may slip in the fourth quarter.

Qu Hongbin, an economist at HSBC, said the final HSBC PMI was revised up from its preliminary reading after firms reported more business, but said spots of weakness in the PMI poll should prevent China from tightening monetary policy.

"The renewed contraction of employment and the slower pace of restocking activities call for a continuation of accommodative policy," he said.

With the economy growing at a rate of over seven percent and house prices clinging stubbornly to record highs, China's leaders have signaled lately that policy may be tightened slightly to temper price pressures.

The latest PMI surveys showed China's economic growth remained resilient in November.

A sub-index for new orders, a measure of domestic and foreign demand, hit an eight-month high of 51.7 in November in the final HSBC PMI.   Continued...

A worker operates a machine to cut a pipeline at a factory in Qingdao, Shandong province November 29, 2013. REUTERS/China Daily