China on course to be first nation to bounce back from pandemic
Factory activity in China is expanding at its fastest pace in more than three years while the country’s services sector has hit a multi- year high.
Factory activity in China is expanding at its fastest pace in more than three years and growth in the country’s services sector also has hit a multi- year high, according to new data.
The latest figures raise the prospect of China becoming the first country to fully bounce back from the shutdowns triggered by the Covid-19 pandemic, with the manufacturing sector back to pre-outbreak levels.
The purchasing manager’s index increased to 52.1 in November from 51.4 the month before, according to data from the National Bureau of Statistics. It was the highest PMI reading since September 2017 and is above the 50-point mark that separates growth from contraction. The figure was also higher than the 51.5 forecast in a poll of analysts by Reuters.
The figures briefly lifted Chinese stock markets, with the Shanghai Composite index up 0.7 per cent before reversing and closing 0.5 per cent down.
China’s PMIs were boosted by positive new export orders, which have benefited from foreign demand for medical supplies and electronic goods, and online shopping promotions.
Julian Evans-Pritchard, senior China economist at Capital Economics, the consultancy, said: “Strong foreign demand for Covid-19-related products amid fresh lockdowns is likely to have been a key factor behind the latest rise in the reading, although Chinese exports also continue to do well more broadly.”
China’s economy is powering ahead, while western economies continue to battle a resurgence in Covid-19 cases. China is likely to end the year with an even bigger economy than it had at the start, with economists at the International Monetary Fund expecting annual growth of 1.9 per cent, well ahead of rival countries.
China rebounded quickly over the spring thanks to a state-driven infrastructure boom. However, the services sector lagged behind for several months as consumers cut back on spending in restaurants, cafes and bars.
The recovery is now becoming more broadly based. The latest figures show that the services index increased from 55.5 to 55.7, its highest reading since June 2012.
The broader non-manufacturing PMIs recorded their ninth straight month of expansion, with the reading rising to 56.4, the fastest pace since June 2012 and up from 56.2 in October. Analysts said that it was the fifth consecutive reading above 51 and the ninth above 50.
It was driven by a rise in the construction index from 59.8 to 60.5, thanks to the continued strength of state-led infrastructure spending.
The positive PMIs have increased confidence of a rise in the economy in the fourth quarter, with analysts at Nomura forecasting GDP to recover to 5.7 per cent year-on-year, up from 4.9 per cent in the third quarter. Over the year, the economy is expected to expand by about 2 per cent, its weakest growth in more than three decades but stronger than that of countries still struggling to control the coronavirus.
The Times
