PMI turnaround shows China back on track: HSBC

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PMI turnaround shows China back on track: HSBC

HONG KONG - China’s manufacturing hit a 19-month high in December, indicating that the country is on track to recover from the global economic downturn, British bank HSBC said yesterday.

The bank’s final figure for China’s purchasing managers index (PMI) came at 51.5 percent in December, compared to 50.5 percent for the month before, the bank said.

The PMI is an index that measures the health of a country’s manufacturing sector. A reading of 50 or above represents an expansion of the sector from the previous month while a reading of below 50 represents a contraction.

The British bank releases a preliminary figure of the Chinese manufacturing PMI in the middle of a month and a final figure at either the end of that month or at the beginning of the following month. Compared to China’s official PMI figure that is focused on big, state-owned firms, HSBC’s PMI is based on surveys of smaller, private firms, the bank said. The official figure is scheduled to be released by the China Federation of Logistics and Purchasing today. December was the fourth consecutive month of relative improvement in HSBC’s PMI for China and the second above a 50 level since October 2011, HSBC said.

“This improvement was mainly driven by an expansion of production, on the back of a strong increase in new business inflows,” said Ma Xiaoping, a China economist at HSBC.

“Economic momentum is expected to hold up in the coming quarters despite still soft external demand. Our forecast of an 8.6 percent GDP growth rate [for 2012] remains intact.”

However, the external environment remains challenging, calling for sustained policy support on both the fiscal and monetary fronts. Yonhap

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