Recruiting in China

Manufacturing on the mainland grew more last month than analysts estimated, indicating the economic recovery is sustaining momentum amid government efforts to rein in credit growth.

The purchasing managers' index was 51.4, the National Bureau of Statistics and China Federation of Logistics and Purchasing said yesterday.

The reading was the same as in October, which was an 18-month high, and exceeded 24 out of 26 estimates in a survey.

Stability in manufacturing growth in the world's second-biggest economy may give Premier Li Keqiang more room to implement policy changes laid out after a key meeting of top Communist Party leaders last month.

While industrial investment is picking up and retail sales have increased 13 per cent so far this year, the mainland faces headwinds that include industrial overcapacity, excessive corporate debt and slower export demand.

"This is good news for policymakers, as the expected slowdown in growth appears pretty mild," said Shen Jianguang, the chief Asia economist at Mizuho Securities Asia in Hong Kong.

"As policymakers can be assured of growth over 7.5 per cent, the attention is now firmly on reform."

The stock market's Shanghai Composite Index rose 3.7 per cent last month, the biggest monthly gain since August, on optimism that the reform package outlined on November 15 will bolster the economy and corporate earnings.

Economists estimate growth in gross domestic product will slow to 7.5 per cent next year from 7.6 per cent this year. The government set a target for 7.5 per cent expansion this year, and Li said in October annual growth of 7.2 per cent was needed to keep unemployment stable.

The PMI figure contrasts with a decline to 50.4 from October's 50.9 in the preliminary reading of a separate gauge from HSBC and Markit Economics released on November 21, the final number for which is due tomorrow.

Numbers above 50 signal expansion in manufacturing, while those below point to a contraction.

The PMI for large companies in the official report rose to 52.4 from 52.3 in October, the highest level in 19 months, while the gauge for small companies slid to 48.3 from 48.5, the statistics bureau said.

"It's clear that the improvements are coming from the big enterprises, and there's little improvement in the structure" of demand, said Hu Yifan, the chief economist at Haitong International Securities in Hong Kong.

"Small companies will only recover when the overall macroeconomic situation recovers, once the economy starts to push from the bottom."

The PMI survey from the statistics bureau is based on responses from purchasing managers in 3,000 manufacturing companies. The HSBC survey is based on responses from managers at more than 420 businesses, and is weighted towards smaller private companies.

A gauge of output in the official survey rose to 54.5 from 54.4 in October, and an index of employment rose for a second month to 49.6, the highest level since March.

A measure of new orders declined to 52.3 from 52.5, and a gauge of new export orders increased to 50.6 from 50.4.