by Staff Writers
Hong Kong (AFP) Dec 3, 2012
Factory activity across Asia broadly picked up in November, with China adding to the improvement seen in the previous month, as hopes rise that the region is beginning to rebound from its recent slumber.
The latest batch of purchasing managers' indexes from HSBC show manufacturing activity in China hit a 13-month high, while India also saw its strongest expansion since June.
The news comes despite the debt crisis in Europe, a key market for many of Asia's exporter nations, which has seen demand slump, while analysts also warned of the impact if US lawmakers do not agree a deal to avert the fiscal cliff.
China's PMI hit 50.5 last month, the British banking giant said, up from 49.5 in October and putting it above the 50 mark that indicates growth. A reading below signals contraction.
The figure signals a return to growth after 12 consecutive months of contraction as the crucial manufacturing sector has been hit by a global slowdown as well as the the eurozone crisis.
It is the highest reading since October last year, when the figure was 51, according to HSBC.
The figures come after the official PMI reading showed expansion in November for the second month in a row, hitting 50.6, compared with 50.2 in October and 49.8 in September.
Economic growth hit a more than three-year low of 7.4 percent in the third quarter from July to September but recent data have fuelled optimism that the worst is over.
Exports, industrial production, retail sales and fixed asset investment -- a key gauge of infrastructure spending -- have all shown improvement.
Qu Hongbin, a Hong Kong-based economist with HSBC, said: "This confirms the Chinese economy continues to recover gradually."
And Tang Jianwei, a Shanghai-based economist for Bank of Communications, tipped conditions to further improve next year.
"Next year the economic outlook will be better, especially with the coming of the Chinese New Year when demand will increase. We will likely see steady improvement in PMI in the next few months," he told AFP.
There was some cheer for India, which continues to struggle with a debilitating slowdown, with HSBC's PMI climbing to a seven-month high of 53.7 in November, from 52.9 in the previous month.
South Korean manufacturing contracted in November for a sixth straight month but the pace of decline slowed, HSBC said, with the PMI at a five-month-high 48.2 versus 47.4 in October. Adding to the sense of improvement was news Saturday of a jump in export growth.
Elsewhere, Indonesia's PMI came in at 51.5 in November, slightly below October's 51.9 but still marking growth, while Vietnam climbed to 50.5 -- its highest its highest in 14 months -- from 48.7.
However, the Australian Industry Group Performance of Manufacturing Index fell 1.6 points in November to 43.6, while Taiwan's PMI fell to 47.4 in November from 47.8 the previous month.
While the latest data indicate Asia looks to be emerging from recent weakness analysts said there could still be headwinds from the US fiscal cliff of tax hikes and spending cuts due to take effect from January 1.
If the measures do come in there is a broad consensus that they will tip the US economy back into recession, which would reverberate across the world.
Morgan Stanley said in a report that "high uncertainty in eurozone and (the) imminent 'fiscal cliff' risk in the US will likely continue to weigh on (the) global recovery".
And Song Seng Wun, a regional economist with Malaysian bank CIMB, told AFP the improvements were driven by demand for consumer goods such as smartphones and tablets ahead of Christmas, while stimulus measures were also providing support.
"The expansion could still falter if demand starts to cool off after the festive period," Song warned.
He added that the next two months should also see strong demand because the Chinese Lunar New Year comes in February.
"After that, we'll see what happens because the US government might shut down," he said, referring to the fiscal cliff.
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