However, commentators warned that the positive findings of November’s HSBC/Markit Flash Manufacturing Purchasing Managers’ Index (PMI) do not necessarily mean a strong rebound can be expected.
The PMI rose to 50.4 points this month, up from the 49.5 recorded in October. A reading of 50 points and above indicates that manufacturing activity grew over the month and this is the first time expansion has been seen in 13 months.
Hongbin Qu, HSBC’s chief economist for China and co-head of Asian economic research, said: “This confirms that the economic recovery continues to gain momentum towards the year end.
“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.”
Capital Economics’ chief Asia economist Mark Williams and China economist Qinwei Wang said the PMI offers “further reassurance” a Chinese recovery has taken hold but caution that a strong rebound is likely to remain elusive.
The economists pointed out that there is “lingering weakness” in domestic demand, which is probably worse than some commentators expect, and overseas demand is being held back by problems such as the eurozone debt crisis.
“Overall, today’s upbeat PMI release further strengthens the view that conditions in China’s economy have turned around. But we believe the recovery is patchy.” Williams and Wang said.
