China's economy continues to rebound post Covid

China’s manufacturing sector expanded at the fastest rate in more than three years in November, official data showed on Monday, as the country’s economy continued to rebound from the impact of Covid-19.

The services sector also performed strongly, the National Bureau of Statistics reported.

The official monthly purchasing managers' index rose from 51.4 in October to 52.1 in November, the highest reading since September 2017. It also beat most analyst forecasts of around 51.5.

A reading above or below the neutral 50.0 point indicates either growth or contraction, respectively.

Miguel Chanco, senior Asia economist at Pantheon Macroeconomics, said: "The jump to a three-year high was broad-based, with the output, new orders and employment sub-indices all rising from the previous month, though the last of these remain below 50.

"However, we find a great deal of residual seasonality in the official data. On our adjustment, the index merely inched up by a tenth of a point, as a dip in the output component cancelled out some of the most modest improvement elsewhere."

Meanwhile, the non-manufacturing PMI rose to 56.4 from 56.2 in October. It was the ninth consecutive month that activity has expanded and the fastest rate of growth since June 2012. It also narrowly missed the consensus, which was looking for an easing, to 56.0.

Said Chanco: "The stronger gain was down to the construction sector, which showed more signs of life after cooling over the last three months. Indeed, the construction sub-index jumped to 60.5 from 59.8 in October, marking the strongest increase since July. The services gauge continued to rise this month, hitting a new multi-year high at 55.7."

Beijing declared in March that the coronavirus outbreak, which began in south-west China, was under control. Since then restrictions have remained in place but factories, shops and offices have reopened, helping lift consumer confidence and boosting demand.

Michael Hewson, chief market analyst at CMC Markets, said: "China’s economy has continued to rebound from its lockdown earlier this year…as Chinese households continue to loosen the purse strings after a cautious summer, due to concerns about a second wave, that has so far failed to materialise."