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Survey finds China manufacturing hits 2-year high

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January 23, 2013 11:58 PM EST | AP

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HONG KONG — China's manufacturing activity crept higher this month to the fastest pace in two years, a survey showed Thursday, another sign the world's second-biggest economy is coming out of a downturn.

A preliminary version of HSBC's monthly purchasing managers' index rose for the fifth month in a row to 51.9 in January, up from 51.5 in December. Readings above 50 on the 100-point scale indicate an expansion.

China's economy is rebounding from its deepest slump since the 2008 global financial crisis but many analysts predict the recovery will be anemic, with domestic demand holding up while export growth is more uncertain because of continuing weakness in the U.S. and Europe.

HSBC's chief China economist, Qu Hongbin, said that gains in new business allowed manufacturers to step up production by adding jobs and making more purchases.

"Despite the still tepid external demand, the domestic-driven restocking process is likely to add steam to China's ongoing recovery in the coming months," Qu said.

The Chinese economy expanded 7.9 percent in the final quarter of last year, up from 7.4 percent in the previous quarter, according to data released earlier this month. For all of 2012, the economy expanded 7.8 percent, the slowest annual performance since the 1990s.

Many analysts predict that the rebound will peak in the coming months before easing off to produce growth of about 8 percent this year, well below double-digit rates of the past decade.

HSBC's index is based on responses from 85 to 90 percent of purchasing executives surveyed at 420 manufacturers. The full version is due a week later.