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Manufacturing growth tops expectations

Activity in China’s manufacturing sector grew more than expected in November, expanding at its strongest pace in more than two years. That came as the world’s second-largest economy picks up momentum heading into the new year.

The official Purchasing Managers’ Index stood at 51.7 in November, accelerating from October’s 51.2 and above the 50.0 mark that separates growth from contraction. China’s manufacturing sector has picked up in recent months after a rocky start, buoyed by a government infrastructure building spree and a housing boom. All subcategories reported growth of more than 2 percent higher than the last reading.

Senior statistician of National bureau of statistics, Zhao Qinghe, said, “Both production and demands were up as we’ve seen a jump in new orders. Consumption goods and manufacturing accelerated quickly, and exports also picked up.”

The jump in exports was partly helped by a weakening yuan against the US dollar. However, the increase also lifted purchasing and logistics costs for businesses that require overseas materials, especially in the electronics industry.

Vice president of China Logistics and Purchasing federation, Cai Jin, said, “Logistics cost is rising as we’ve seen a rebound in purchasing prices. That creates pressure for downstream businesses. Also, a rebound in commodities prices has also added to the rising cost.”

The non-manufacturing sector also recorded a solid performance, with its PMI at 54.7, the highest in two years. A boom in the real estate market has been contributing to the increase. But there was a drop in real estate business activity, in new orders and sales prices, in November.

Cai said, “That means housing control policies put out by local governments have shown their effects. We should expect more downward corrections in the real estate market.”

Construction has been hit by cold weather but still remained strong with growth of over 60 percent year on year.