Survey: China manufacturing at 6-month high

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By KELVIN CHAN, Associated Press

HONG KONG (AP) — China's manufacturing rose to a six-month high in September, in the latest sign that the world's second biggest economy is gradually recovering from a prolonged slowdown.

The preliminary version of HSBC's purchasing managers' index released Monday climbed to 51.2 from 50.1 in August on a 100-point scale. Numbers above 50 indicate an expansion in activity.

The survey is another encouraging sign for China's leaders as they try to reverse a slowdown that dragged down growth to a two-decade low of 7.5 percent in the latest quarter. It adds to other recent indicators including improved trade, factory output and auto sales, that suggests the slowdown is leveling out.

HSBC's survey found output, new orders and work backlogs all increased at a faster rate during the month. New export orders also rose.

"The firmer footing was supported by simultaneous improvements of external and domestic demand conditions," HSBC China economist Qu Hongbin said.

The upbeat report on the country's massive manufacturing industry gives the country's communist leaders further breathing room as they try to shift focus from reviving the economy to longer-term structural reforms that analysts say are needed to maintain robust economic growth.

China's leaders responded to the unexpectedly sharp slowdown earlier this year with targeted measures such as higher spending on railway construction and tax cuts for businesses. But they've resisted appeals for more broad-based stimulus as they try to nurture more self-sustaining growth driven by domestic consumption rather than trade and investment.

Qu said he expected a "more sustained recovery" as the effects of the recent "fine-tuning measures" starts to filter through and lift economic demand.

"This will create more favorable conditions to push forward reforms, which should in turn boost mid- and long-term growth outlooks," he said.

The HSBC report is based on 85-90 percent of responses from 420 purchasing executives. The full report is due Sept. 30.

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