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Manufacturing on rise in China

14-12-2010
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in 

China’s manufacturing activity expanded at a faster pace in November than in October, fuelling worries about inflationary pressures.

Input prices rose sharply, raising concerns further tightening measures are needed to ease rising inflation.

China's Purchasing Managers Index rose to 55.2 in November from 54.7 in October, the China Federation of Logistics and Purchasing, which issues the data with the National Bureau of Statistics, said in a statement.

Meanwhile, the HSBC China Manufacturing Purchasing Managers Index, another measure of nationwide manufacturing activity, rose to 55.3 in November from 54.8 in October, HSBC said, the highest reading since March.

"This provides further evidence that price pressures are uncomfortably strong and will reinforce the case for further – and more urgent – policy normalisation to get inflation under control," Royal Bank of Canada economist Brian Jackson said.

Respondents to the HSBC survey reported raw material shortages and supply chain bottlenecks, which could indicate further near-term price pressures, Mr Jackson added.

A PMI reading above 50 indicates an expansion in manufacturing activity, while a reading below 50 indicates contraction.

The CFLP PMI's input prices subindex rose to 73.5 from 69.9 in October, showing inflation pressures continue to increase. HSBC doesn't provide a breakdown of its subindexes, but said that both output and input prices rose at "substantial and accelerated rates".

The output price index in particular indicated "a substantial rate of inflation that was the fastest since the start of the series in 2004," HSBC said.

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