Chinese factory recovery on the up in November

Ben Southwood
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RECOVERY in the Chinese manufacturing sector sped up in November, according to official statistics out yesterday, though growth was still only moderate.

The official manufacturing purchasing managers’ index (PMI) – a prominent business survey – hit 50.6 in November, a seven-month high, and up from 50.2 in October. But the figure was still only slightly above the 50 level that indicates no change.

But some economists threw cold water on the extent of private sector strength. “The improving numbers are mostly because of government investment,” said Don Xian’an at Peking First Advisory. “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.”

Underlining this point was the divergence between big firms, which saw growth accelerate, and smaller and medium-sized firms, which saw faster retrenchment, according to a statement from the National Bureau of Statistics, which prepares the data.

The upturn in the PMI will be welcomed by Premier Wen Jiabao, who is fighting to end the growth slowdown.