China’s manufacturing activity surged to a 19-month high last month, British bank HSBC said yesterday, adding to signs of recovery in the world’s second-largest economy.
The year’s final purchasing managers’ index (PMI) from the lender hit 51.5, up from 50.5 in November when the figure returned to growth after 12 consecutive months of contraction.
A reading above 50 indicates expansion in the key sector, while one below signals shrinkage.
Last month’s reading was also better than a preliminary 50.9 announced earlier in the month and marked the fourth straight month-on-month improvement.
“Such a momentum is likely to be sustained in the coming months when infrastructure construction runs into full speed and property market conditions stabilise,” Qu Hongbin (屈宏斌), HSBC’s chief economist for China, said in the release.
The index, compiled by information services provider Markit and released by HSBC, tracks manufacturing activity and is a closely watched barometer of the health of the economy.
Output at factories expanded for the second straight month last month at the fastest pace in 21 months, while total new orders rose at the fastest clip since January 2011, HSBC said.
China’s strengthening manufacturing sector, and improvements in areas including broader industrial production and retail sales, have spurred optimism that the country’s economic slowdown has bottomed out.
Economic growth hit a more than three-year low of 7.4 percent in the third quarter to September, though data so far for the fourth quarter has led analysts to expect a pick-up.
Qu said that prevailing conditions and continued government policy support should see the economy grow about 8.6 percent this year.
The Chinese government has forecast last year’s economic growth to come in at 7.5 percent, considerably lower than the 9.3 percent recorded in 2011 and 10.4 percent racked up in 2010.
Ren Xianfang (任現芳), economist with IHS Global Insight in Beijing, said the PMI data confirm the “rebound trajectory” of China’s economy.
“Having escaped the hard-landing curse in 2012, the Chinese economy looks to have a better chance delivering a slightly stronger growth in 2013,” she said in an e-mail.
She said infrastructure and housing construction would bolster the economy this year, “while the external sector’s contribution to growth will likely remain minimal or negative.”
Indeed, weakness in the global economy — where Europe is still struggling with its debt crisis and concerns remain over the strength of recovery in the US — is seen as a potential hurdle for China’s recovery.
Exports for November rose just 2.9 percent year-on-year to US$179.4 billion, much lower than market expectations.
New export orders as reflected in last month’s PMI fell slightly, according to HSBC.
“The external environment remains challenging as we enter 2013,” according to a separate analysis by the bank.
“This is reflected not only by the drop in the new export orders readings within the HSBC PMI, but also by fast fading hopes of an effective resolution to the US’s ‘fiscal cliff’ crisis,” the analysis said.
“Moreover, European economic fundamentals remain weak,” it added.
Political leaders in the US are working against today’s deadline to avoid the “fiscal cliff” — a punishing package of spending cuts and tax hikes due to take effect today that could derail the country’s recovery, with knock-on effects globally.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
TRANSFORMATION: Taiwan is now home to the largest Google hardware research and development center outside of the US, thanks to the nation’s economic policies President Tsai Ing-wen (蔡英文) yesterday attended an event marking the opening of Google’s second hardware research and development (R&D) office in Taiwan, which was held at New Taipei City’s Banciao District (板橋). This signals Taiwan’s transformation into the world’s largest Google hardware research and development center outside of the US, validating the nation’s economic policy in the past eight years, she said. The “five plus two” innovative industries policy, “six core strategic industries” initiative and infrastructure projects have grown the national industry and established resilient supply chains that withstood the COVID-19 pandemic, Tsai said. Taiwan has improved investment conditions of the domestic economy
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
MAJOR BENEFICIARY: The company benefits from TSMC’s advanced packaging scarcity, given robust demand for Nvidia AI chips, analysts said ASE Technology Holding Co (ASE, 日月光投控), the world’s biggest chip packaging and testing service provider, yesterday said it is raising its equipment capital expenditure budget by 10 percent this year to expand leading-edge and advanced packing and testing capacity amid strong artificial intelligence (AI) and high-performance computing chip demand. This is on top of the 40 to 50 percent annual increase in its capital spending budget to more than the US$1.7 billion to announced in February. About half of the equipment capital expenditure would be spent on leading-edge and advanced packaging and testing technology, the company said. ASE is considered by analysts