Larger picture it shows how far our world has changed... speculators worldwide now are as interested (and dependent) on Chinese data for their guideposts, over and above U.S. data. Even 5 years ago, this was not the case.
Please note aside from the headline data (there are 2 PMI readings, one private and one government), input prices surged - that is the inflation being created by all the easy money being tossed into the system. As we've been opining for months the great mystery is who will eat this inflation - someone along the food chain has to, whether producer or consumer.
- China’s manufacturing grew at a faster pace for a fourth straight month in November, indicating the economy can withstand higher interest rates as price pressures escalate. The Purchasing Managers’ Index rose to 55.2 from 54.7 in October, China’s logistics federation said on its website today. That was more than the 54.8 median estimate of 14 economists surveyed by Bloomberg News. A PMI released by HSBC Holdings Plc also jumped.
- Today’s reports showed input prices surging, reinforcing the case for the central bank to boost borrowing costs again after it lagged behind counterparts from Malaysia to South Korea.
- “The risk of a sharp growth deceleration has abated, but all signs are suggesting that inflation may surprise on the upside,” said Tao Dong, a Credit Suisse AG economist in Hong Kong. He called input-price data “alarming.”
- The logistics federation’s PMI showed the strongest reading in seven months, while the measure released by HSBC and Markit Economics was at an eight-month high of 55.3.
- The Chinese picture of stronger manufacturing and climbing prices was repeated across Asia in reports released today by HSBC and Markit for India, South Korea and Taiwan.
- In contrast, an Australian measure slid, a report by the Australian Industry Group and PricewaterhouseCoopers showed today.
More on the surging input prices:
- The logistics federation’s index of input costs rose to 73.5, the highest level since June 2008. The HSBC report showed that manufacturers increased output prices by the most since data began in 2004.
- McDonald’s Corp., the world’s largest restaurant chain, increased prices in China on Nov. 17 to offset rising costs. Kweichow Moutai Co., China’s biggest liquor maker by market value, may raise prices by as much as 24 percent this month, according to a report by Shenyin & Wanguo Securities Co.
- In the PMI surveys, purchasing managers cited price gains in agricultural goods, cotton and raw materials including fuel and steel. Spot prices of power-station coal at Qinhuangdao port, a Chinese benchmark, rose to a two-year high this week.
- Premier Wen Jiabao announced Nov. 17 a package of measures to counter inflation, from the threat of price caps for “daily necessities” to pledges to maintain the food supply by selling state reserves. Chinese futures for commodities including cotton, sugar, rice and natural rubber have climbed to records in the past two months.
The government-backed PMI, released by the Beijing-based China Federation of Logistics and Purchasing and the National Bureau of Statistics, covers more than 820 companies in 20 industries, including energy, metallurgy, textiles, automobiles and electronics. The HSBC survey covers more than 430 firms.