Chinese manufacturing grew more than analysts estimated last month, indicating the nation’s economic recovery is sustaining momentum amid government efforts to rein in credit growth.
The Purchasing Managers’ Index (PMI) was 51.4, the National Bureau of Statistics and China Federation of Logistics and Purchasing said yesterday in Beijing. That is the same reading as October, which was an 18-month high, and exceeded 24 out of 26 estimates in a Bloomberg News survey.
Stability in manufacturing growth in the world’s second-biggest economy may give Chinese Premier Li Keqiang (李克強) more room to implement policy changes laid out after a Chinese Communist Party meeting last month.
While industrial investment is picking up and retail sales have increased 13 percent so far this year, China faces headwinds that include industrial overcapacity, excessive corporate debt and slower export demand.
“This is good news for policy makers as the expected slowdown in growth appears pretty mild,” said Shen Jianguang (沈建光), chief Asia economist at Mizuho Securities Asia Ltd in Hong Kong. “As policy makers can be assured of growth over 7.5 percent, the attention is now firmly on reform.”
Economists estimate GDP growth in China will slow to 7.5 percent next year from 7.6 percent this year, according to the median projection in Bloomberg News surveys last month. The Chinese government set a target for 7.5 percent expansion this year and Li said in October that China needs annual growth of 7.2 percent to keep unemployment stable.
The median estimate for yesterday’s PMI was 51.1 with projections ranging from 50.8 to 51.5. The reading contrasts with a decline to 50.4 from October’s 50.9 in the preliminary figure of a separate gauge from HSBC Holdings Plc and Markit Economics released on Nov. 21.
The final number is due today. Numbers above 50 signal expansion in manufacturing while readings below point to a contraction.
The PMI for large companies in yesterday’s report rose to 52.4 from 52.3 in October, the highest level in 19 months, while the gauge for small companies slid to 48.3 from 48.5, the statistics bureau said.
“It’s clear that the improvements are coming from the big enterprises and there’s little improvement in the structure” of demand, said Hu Yifan (胡一帆), chief economist at Haitong International Securities Group Ltd in Hong Kong. “Small companies will only recover when the overall macroeconomic situation recovers, once the economy starts to push from the bottom.”
The PMI survey from the statistics bureau is based on responses from purchasing managers in 3,000 manufacturing companies. The HSBC survey is based on responses from managers at more than 420 businesses, and is weighted toward smaller private companies.
A gauge of output in yesterday’s survey rose to 54.5 from 54.4 in October and an index of employment rose for a second month to 49.6, the highest level since March. A measure of new orders declined to 52.3 from 52.5 and a gauge of new export orders increased to 50.6 from 50.4.