China's vast manufacturing sector saw expansion accelerate in November for the first time in 13 months, preliminary results from a factory survey showed, a sign that the pace of economic growth has revived after seven consecutive quarters of slowdown.
The China HSBC Flash Manufacturing Purchasing Managers Index (PMI) rose to a 13-month high of 50.4 in November, the latest indicator of recovery in the real economy after data showing solid credit growth, firmer exports and rising industrial output in the previous month.
A sub-index measuring output rose to 51.3, also the highest since October 2011.
"This reflects that conditions for smaller firms, especially exporters, are looking up," said Li Wei, a Shanghai-based economist for Standard Chartered. "The consensus in the market is already for a small, gradual improvement."
An uptick in key economic activity indicators in October, following encouraging signs in September, cemented the view of many analysts and investors that a rebound in the world's second largest economy gathered momentum as it entered the fourth
quarter, thanks to a raft of pro-growth policies rolled out by the government over recent months.
China is currently shuffling its senior officials after the seven top leaders of the ruling Communist Party were selected at a congress last week. The new appointments should end months of uncertainty in the highest ranks, although economic policy is not expected to change abruptly in the near-term.
Even before the congress, the central bank had moved to ease liquidity by pumping short-term cash into money markets rather than resorting to the interest rate cuts or reduction in banks' required reserve ratios that many investors had expected.
STEADY THROUGH YEAR-END
This month's PMI reading above 50 is likely to be seen as a turning point by the market, particularly if it is born out by the final reading due on Dec. 1 and by official indicators.Asian shares extended gains slightly after the data to stand up nearly 1 percent on the day and the Australian dollar, sensitive to demand from the biggest customer for Australia's resources, rose as far as $1.04.
"This confirms that the economic recovery continues to gain momentum towards the year-end,"
Qu Hongbin, chief China