China’s economy is showing signs of a rebound from a seven-quarter slowdown after upbeat manufacturing data today. The final reading for HSBC’s purchasing manager’s index (PMI) for manufacturing rose to 51.5 in December from a preliminary reading of 50.9 on December 14 and up from November’s final reading of 50.5.
A number above 50 indicates expansion while a number below 50 signals contractions.
This is the fastest pace in 19 months that the Chinese economy has expanded, boosting optimism that a recovery in the world’s second-biggest economy is gaining traction. The forecast was for a final reading of 50.9.
Much of the reason behind the expansion was due to an increase in government spending on infrastructure and accelerated investment-project approvals. The pickup may smooth the ruling Communist Party’s once-a-decade transition to a new generation of leaders headed by Xi Jinping who recently took office as general secretary in November.
“Momentum is likely to be sustained in the coming months when infrastructure construction runs into full speed and property market conditions stabilize,” said HSBC’s chief China economist, Qu Hongbin in a statement today.