HSBC, NBS PMI data show strong manufacturing growth

The HSBC purchasing manager index (PMI) for China reached 56.1 in December, the highest level since the survey was established in April 2004, Reuters reported. Qu Hongbin, chief China economist at HSBC, attributed the record expansion in manufacturing activity to the second wave of national stimulus and infrastructure spending measures. The National Bureau of Statistics earlier released its own PMI for December, which at 56.6 also showed strong manufacturing growth. Inflation remains a risk as manufacturing prices rose at their highest rate in 17 months, but strong export orders and the third-fastest rate of job creation in survey history give the government greater flexibility to restrain money growth. Many observers say that excess industrial capacity will provide additional downward pressure on prices.