The pace of activity in China?s vast manufacturing sector quickened for the first time in 13 months in November, a survey of private factory managers found, adding to evidence that the economy is reviving after seven quarters of slowing growth.
The final reading for the HSBC Purchasing Managers? Survey (PMI) rose to 50.5 in November from 49.5 in October, in line with a preliminary survey published late last month. It was the first time since October 2011 that the survey crossed 50, the line that demarcates accelerating from slowing growth.
The final HSBC reading follows a similar survey by the National Bureau of Statistics (NBS) released this weekend, which showed the pace of growth in the manufacturing sector quickening. The official PMI rose to a seven-month high of 50.6 for November, from 50.2 in October.
?This confirms that the Chinese economy continues to recover gradually,? HSBC?s chief China economist Hongbin Qu wrote. An official PMI survey of China?s non-manufacturing sectors also ticked up, to 55.6 in November from 55.5 in October, led by expanded activity in construction services. But growth in air and rail transport and food and beverages both slowed.
While a recovery in growth appears possible, there are troubling signs that China is still relying too much on state-led investment rather than the more dynamic private sector.
Growth accelerated for large firms for the third month in a row, but medium and smaller companies saw a retrenchment, with the decline more pronounced for the smaller firms, the NBS said in a statement not accompanying its official manufacturing PMI survey. ?The improving numbers are mostly because of government investment,? said Dong Xian?an, economist with Peking First Advisory, referring to the official PMI. ?From the second quarter the government has unleashed a lot of projects, and that has started to be felt in the economy, but it?s not a very healthy recovery yet.?
Euro zone downturn eases to 8-month low
The contraction in activity at the euro zone?s embattled manufacturers eased to an eight-month low in November, although a meaningful recovery still looks a long way off, a survey showed on Monday.
Markit?s Eurozone manufacturing Purchasing Managers Index (PMI) rose to 46.2 in November from October?s 45.4, though it stayed below 50 for the 16th straight month.
The figure was unchanged from the preliminary reading of two weeks ago that surpassed even the most optimistic expectations of economists polled by Reuters. Still, the PMI pointed to little sign of an imminent turnaround and merely showed factory activity, new orders and output declining at a slower rate. Manufacturing accounts for around a quarter of the euro zone?s private economy and is dwarfed by a services sector that fared badly in November, the data two weeks ago showed.
?The ongoing steep pace of manufacturing decline suggests that the region?s recession will have deepened in the final quarter of the year, extending into a third successive quarter,? said Chris Williamson, chief economist from survey compiler Markit.
?With official data lagging the PMI, the rate of GDP decline is likely to have gathered pace markedly on the surprisingly modest 0.1% decline seen in the third quarter.?
?On the plus side, the manufacturing PMI seems to have bottomed out in July, suggesting things are looking a little bit brighter,? Williamson added.
Surveys point to dip in US manufacturing
Manufacturing in the US probably cooled in November as business demand slowed and disruptions from superstorm Sandy limited production, according to economists surveyed before a report.
The ISM?s factory index fell to 51.5 from 51.7 in October, according to the median estimate of 75 economists surveyed by Bloomberg. Other figures may show construction spending increased in October.
Less corporate spending on equipment as lawmakers debate the budget, weaker orders from overseas and disturbances related to the biggest Atlantic storm ever to hit the US are converging to slow manufacturing.
