China: Manufacturing sector expands

Workers move steel pipes in China. The country's manufacturing sector is showing signs of life.

HONG KONG (CNNMoney) -- China's official manufacturing index increased in November, boosting hopes for a sustained expansion in the crucial sector.

China's official purchasing manager's index jumped to 50.6 in November from 50.2 the previous month, the government said. Any reading above 50 indicates that factory conditions are improving in the manufacturing sector.

Another measure of manufacturing activity released Monday, HSBC's initial purchasing manager's index, also indicated improvement in the sector. At 50.5, the index is at its highest level in 13 months.

"This confirms that Chinese economy continues to recover gradually," said Hongbin Qu, an economist at HSBC.

The fate of manufacturing in China is considered a barometer of the global economy because of the country's role as a powerhouse exporter. And because it makes up a large part of China's economy, manufacturing strength plays an important role in shaping domestic policy.

China's economy has grown at an average of around 10% a year for the past three decades, allowing the country to rocket past international competition to become the world's second largest economy.

While GDP growth was slower last quarter than many economists expected at 7.4%, recent data on manufacturing and exports suggest growth is beginning to rebound.

HSBC's Qu now expects GDP to increase to around 8% in the fourth quarter as stimulus measures take hold.

First Published: December 2, 2012: 9:45 PM ET

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