Chinas factory growth held at an 18-month high in November on firm domestic and foreign demand,defying expectations the economy faces a modest slowdown as 2013 draws to a close.
The official Purchasing Managers Index (PMI) stood at 51.4 in November,the National Bureau of Statistics said,unchanged from October and ahead of market expectations for a reading of 51.1.
Investors had expected the PMI,one of the earliest pieces of Chinese data released each month,to show Chinas economy decelerated in the fourth quarter on slacker credit growth,fragile global demand,and slower restocking of inventories by firms.
Growth momentum held up in November, said Louis Kuijs,an economist at RBS in Hong Kong. The export order data suggests that global demand – key to the outlook for Chinas manufacturing – improved a bit.
A sub-index for export orders nudged higher to 50.6 in November from 50.4 in October,hovering above the 50-point threshold separating growth from contraction.
Experts will welcome the unexpected PMI strength as a sign that China can press on with sprawling plans outlined last month to cut back central economic planning without fear of endangering growth.
After three decades of double-digit growth,analysts say Chinas economy has reached a turning point where traditional growth drivers of heavy investment and brisk export sales must make way for a more sustainable expansion in consumption.
In the near-term,Chinas attempt to remake its economy should foster market confidence and perhaps even offset investor jitters over tighter monetary policy,said Kuijs.
After a mild slowdown in the fourth quarter of 2013,we expect China to benefit from improved global growth late this year and in 2014, he said.
Sundays PMI is the latest of a series of data confounding bets that Chinas growth engine is losing steam. Factory production,retail sales and investment had all displayed encouraging growth in October,suggesting the worlds second-largest economy is stabilising. Still,analysts cautioned against undue optimism.