China mfg growth accelerates

China’s manufacturing grew at a faster pace for a fourth straight month in November, indicating the economy can withstand higher interest rates as price pressures escalate.

The Purchasing Managers’ Index rose to 55.2 from 54.7 in October, China’s logistics federation said on its website today. That was more than the 54.8 median estimate of 14 economists surveyed by Bloomberg News. A PMI released by HSBC Holdings also jumped.

Today’s reports showed input prices surging, reinforcing the case for the central bank to boost borrowing costs again after it lagged behind counterparts from Malaysia to South Korea. Concern that monetary tightening will hamper corporate profit growth spurred an 8 per cent sell-off in China’s benchmark stock index in the past month.

“The risk of a sharp growth deceleration has abated, but all signs are suggesting that inflation may surprise on the upside,” said Credit Suisse Economist Tao Dong. He called input-price data “alarming”.

The logistics federation’s PMI showed the strongest reading in seven months, while the measure released by HSBC and Markit Economics was at an eight-month high of 55.3.

The Shanghai Composite Index closed 0.1 per cent higher, rising for the first day in four.

Strength in Asia
The Chinese picture of stronger manufacturing and climbing prices was repeated across Asia in reports released today by HSBC and Markit for India, South Korea and Taiwan.

India needs to keep tightening monetary policy, HSBC economist Leif Eskesen said, commenting on PMI data showing the nation’s fastest manufacturing growth in six months. Taiwan had its first expansion in four months and South Korea switched from a contraction.