China’s manufacturing expands

China’s manufacturing activity surged to a 19-month high in December, British bank HSBC said Monday, adding to signs of recovery in the world’s second-largest economy.

The year’s final purchasing managers’ index (PMI) from the lender hit 51.5, up from 50.5 in November when the figure returned to growth after 12 consecutive months of contraction.

A reading above 50 indicates expansion in the key sector, while one below signals shrinkage.

The December reading was also better than a preliminary 50.9 announced earlier in the month and marked the fourth straight month-on-month improvement.

“Such a momentum is likely to be sustained in the coming months when infrastructure construction runs into full speed and property market conditions stabilise,” Qu Hongbin, HSBC’s chief economist for China, said in the release.

The index, compiled by information services provider Markit and released by HSBC, tracks manufacturing activity and is a closely watched barometer of the health of the economy.

Output at factories expanded for the second straight month in December at the fastest pace in 21 months, while total new orders rose at the fastest clip since January of 2011, HSBC said.

China’s strengthening manufacturing sector, and improvements in areas including broader industrial production and retail sales, have spurred optimism that the country’s economic slowdown has bottomed out.

Economic growth hit a more than three-year low of 7.4 percent in the third quarter to September, though data so far for the fourth quarter has led analysts to expect a pick-up.

Qu said that prevailing conditions and continued government policy support should see the economy grow about 8.6 percent in 2013.

The Chinese government has forecast 2012 economic growth to come in at 7.5 percent, considerably lower than the 9.3 percent recorded in 2011 and 10.4 percent racked up in 2010.

Ren Xianfang, economist with IHS Global Insight in Beijing, said the PMI data confirm the “rebound trajectory” of China’s economy.

“Having escaped the hard-landing curse in 2012, the Chinese economy looks to have a better chance delivering a slightly stronger growth in 2013,” she told AFP in an e-mail.