China's Manufacturing Activity Expands In November: Official PMI

 
on December 01 2012 12:16 AM

China's manufacturing activity expanded in November to a seven-month high, giving the indication that the world’s second-largest economy is reviving its growth momentum.

The data released Saturday by the China Federation of Logistics & Purchasing showed that the Purchasing Managers' Index rose to 50.6 in November from 50.2 in October. Significantly, the index remained in the expansion zone, a reading above 50. The expansion of the manufacturing activity should allay fears of a sharp retardation of the Chinese economy.

According to the HSBC Purchasing Managers’ Index released last week, the initial reading of the PMI, a measure of the nationwide manufacturing activity, rose to 50.40 in November, up from 49.50 in October.

Earlier this month, it was reported that China’s industrial production rose in October compared to that in the previous month, indicating an upswing in the manufacturing output. The data released by the National Bureau of Statistics of China showed that the country’s industrial production, which measures the change in the total inflation-adjusted value of output produced by manufacturers, mines, and utilities, rose to 9.6 percent in October, up from 9.2 percent in September and also more than the analysts’ expectation of 9.4 percent.

The rate of inflation in China slowed down in October compared to that in the same month last year, showing signs of a gradual decline in price pressure to provide scope for monetary easing. The data from the National Bureau of Statistics released earlier this month showed that China’s consumer price index, which measures the change in the price of goods and services from the perspective of the consumer, rose 1.7 percent in October compared to that a year earlier, down from 1.9 percent in September.

The diminishing inflation should be good news because it can help the government invigorate growth without much concern about the rising prices. Market participants are hoping that the policymakers will soon announce monetary easing measures so that the economy will continue to see that industrial activities are picking up.

However, analysts are not fully optimistic about the revival of China’s growth as the global economic condition continues to be weak amid the debt crisis in the euro zone. “Hopes for a strong rebound will probably be disappointed given lingering weakness in domestic demand and uncertainty overseas,” Capital Economic said in a note.

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