China’s factory sector growth reached a two-year high in January, according to a preliminary survey released on Thursday, as the economy continues to demonstrate signs of a rebound. From Reuters:
The HSBC flash purchasing managers’ index (PMI) rose to 51.9 in January, the highest since January 2011 and above the 50-point level that shows accelerating growth in the sector from the previous month.
The PMI, the earliest preview of China’s economic health in 2013, is the latest indication that the world’s second-largest economy is steadily recovering from a near two-year cool-down.
“Despite the still tepid external demand, the domestic-driven restocking process is likely to add steam to China’s ongoing recovery in the coming months,” Qu Hongbin, chief China economist at HSBC, said on Thursday.
The Wall Street Journal points out that HSBC’s PMI reading, which focuses more on small and medium-sized private business as opposed to the SOE-focused official PMI, has been above 50 for three straight months:
“The positive momentum is likely to be sustained in the first half of the year,” said Li Wei, China economist at Standard Chartered. “The general feeling at the moment is that growth is picking up—we should see good growth at least in the first two quarters.”
Meanwhile, at the World Economic Forum in Davos, the head of China’s National Economic Research Institute claimed that China is in the midst of a recovery:
Fan Gang told a session on China’s growth prospects at the World Economic Forum in this Swiss Alpine resort that the world’s second-largest economy should grow faster in 2013 than it did last year.
China posted growth of 7.8 percent last year, its weakest performance since the 1990s, but its economy started reviving at the end of the year when growth rose to 7.9 percent, up from the two previous quarters.
“Now I can say the ‘soft landing’ has landed last year, and now it’s under way to recovery,” said Fan, whose institute is part of the Chinese government.
