BEIJING – Activity in China's critical manufacturing sector picked up in November, as robust global demand for Chinese exports boosted the world's second-largest economy.
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An official gauge of factory activity, the purchasing managers index, edged up to 51.8 in November from 51.6 in October, the National Bureau of Statistics reported Thursday. The reading beat a median forecast of 51.5 by economists polled by The Wall Street Journal and kept the index above the 50-mark that separates expansion from contraction for the 16th month in a row.
China's economy has shown surprising strength, confounding the expectations of many analysts for a slowdown in the year's final months due to Beijing's efforts to cut excess capacity, curb pollution and reduce corporate and financial-sector debt.
The purchasing managers index "suggests that growth momentum held up well in the final quarter despite all these headwinds," said Liu Xuezhi, an economist with Bank of Communications.
After the index ticked down in October, some economists thought the slowdown was under way. Others attributed it to a weeklong holiday and the halting of production at some factories to keep the Beijing area's skies clear during the Communist Party congress.
With those temporary factors gone, the economy is rebounding helped by strong global demand for Chinese exports, said Mr. Liu.
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Orders for exports and imports showed improvement in November, according to subindexes, and that, economists said, bodes well for China's trade figures, which will be released next week.
Global demand, which has been weak in recent years, has staged a sustained revival this year, helping China clock better-than-expected economic growth in the first three quarters.
Adding to the brighter outlook was increased spending by enterprises and faster expansion by equipment and high-tech manufacturing as well as consumer-goods makers, said Zhao Qinghe, an economist with the government's statistics bureau.
Meanwhile, the service sector got a boost from the annual Singles' Day shopping spree on Nov. 11, the biggest online-shopping event for young Chinese consumers. Mr. Zhao said the retail, wholesale, internet and delivery sectors all expanded faster in November, lifting the official nonmanufacturing PMI to 54.8 in November from 54.3 in October.
Strong exports, along with aggressive government spending, drove the Chinese economy to a 6.9% growth rate in the first nine months of the year, putting the government's 6.5% annual growth target in easy reach for the final quarter. Given that, Beijing has already started to scale back its fiscal spending while moving forward in its deleveraging campaign and keeping a lid on a hot property market to try to guide the economy to a healthier footing.
Julian Evans-Pritchard, an economist with Capital Economics, said the slower credit growth, a cooler housing market, reduced fiscal support plus the antipollution crackdown are likely to sap the current growth momentum in the coming months.
(END) Dow Jones Newswires
November 29, 2017 23:51 ET (04:51 GMT)