Surveys Confirm Rebound in Economic Performance

China's economic performance rebounded further in November with two surveys Monday pointing to improved operating conditions in both the service and manufacturing sectors.

The official non-manufacturing Business Activity Index, a gauge of vitality among mainly state-owned service companies, rose to 55.6 last month, the National Bureau of Statistics said. It increased 0.1 points from that in October, and was the strongest in three months.

Meanwhile, the HSBC Purchasing Managers' Index, which measures performance of largely private and export-oriented manufacturers, climbed to a 13-month high of 50.5 in November, up from 49.5 a month earlier, HSBC Holdings Plc and research firm Markit said.

In both surveys, a reading above 50 indicates expansion.

"China's economy has shown more signs of stabilization toward the year end," said Li Maoyu, an analyst at Changjiang Securities Co. "It is bolstered by growing demand from both home and abroad that is seen in industries such toys, retail, logistics and hospitality."

Qu Hongbin, chief economist for China and co-head of Asian economic research at HSBC, said the HSBC PMI confirmed that the Chinese economy was continuing to recover gradually.

"The 13-month high PMI is obtained on increasing new business and expanding production," Qu said. "We expect economic growth to rebound modestly to around 8 percent in the fourth quarter as easing measures continue to filter through."

The component indexes under the HSBC PMI showed that manufacturing production in November increased for the first time since July, new orders rose for a second month in a row and input prices also gained for a second month.

For service companies, new orders rose to 53.2 last month from 51.6 in October, and expectation of business activity climbed to a five-month high of 64.6.

Retail sales improve

China's economic performance has stabilized since September as key indicators such as industrial production, fixed-asset investment and retail sales continued to improve.

Industrial production gained 9.6 percent from a year earlier in October, accelerating from the pace of 9.2 percent in September and August's 8.9 percent. The profits of Chinese manufacturers also surged 20.5 percent in October, the fastest in almost a year.

The positive signs have encouraged some economists to maintain a policy view of "no big stimulus."

Chang Jian, an economist at Barclays, predicted no interest rate cuts in 2013 and said the central bank would remain prudent with its liquidity management.

"We believe the upside conditions will likely sustain in the coming quarters, barring any sharp external shocks," Chang said. "This will be reflected via improving demand and industrial activity data."

However, Zhou Hao, an economist at Australia & New Zealand Banking Group Ltd, said China may need more monetary easing, such as one reserve requirement ratio cut this month, because market liquidity tends to tighten after a large amount of reserve repurchase agreements are maturing.