The purchasing managers’ index rose to 51.0, the highest since September, from 50.5 in January, China’s statistics bureau and logistics federation said in a statement today. The level, above the expansion-contraction dividing line of 50, was the highest since September and compares with the 50.9 median estimate in a Bloomberg News survey. Economic data in the first two months are distorted by the weeklong Chinese New Year holiday.

Today’s data and larger-than-forecast production increases in Japan and South Korea yesterday add to signs that global growth prospects are improving as the U.S. recovery strengthens and Europe works to contain its debt crisis. Stocks in China gained 5.9 percent last month and Asia’s benchmark index entered a bull market yesterday, led by gains in China Shipping Container Lines Co.

The report supports the view that “pent-up demand will produce an export-led bounce in Asian economic activity” now that Europe’s debt turmoil is receding, said Tim Condon, chief Asia economist at ING Financial Markets in Singapore, which accurately forecast today’s result.

‘Transitory’ Slowdown

The fourth-quarter slowdown in exports was probably “transitory” and economic-growth forecasts for Asia “are too low,” said Condon, who previously worked at the International Monetary Fund.

Analysts’ estimates for the gauge ranged from 50 to 51.5. The sub-index of new export orders rose to 51.1, the highest since May and above 50 for the first time since September, from 46.9 in January. The gauge of input prices gained to 54, the highest since September, from 50 in January.

China’s Shanghai Composite Index gained 0.1 percent at 9:47 a.m. The benchmark MSCI Asia Pacific Index of stocks rose as much as 0.1 percent after the report before dropping 0.2 percent at 10:45 a.m. in Tokyo. The gauge had advanced more than 20 percent from its Oct. 5 low as of yesterday.

The federation’s index is based on a survey of managers at more than 800 companies in 28 industries.

China’s gross domestic product expanded 8.9 percent in the fourth quarter of 2011, slowing from a 9.1 percent gain in the previous three months, as the government waged a campaign to tame gains in consumer and housing prices.

Trade Decline

The nation’s exports and imports fell for the first time in more than two years in January, while new lending was the lowest for a January in five years. Housing prices in January failed to rise in any of 70 cities monitored by the government, a statistics bureau report showed.

China’s new loans in February may have been less than 750 billion yuan ($119 billion), the Economic Information Daily, a newspaper owned by the official Xinhua News Agency, reported in today’s edition. The median estimate of six analysts for the report due later this month is for 810 billion yuan.

Today’s manufacturing-index report “looks more like a seasonal rebound,” said Yao Wei, a Hong Kong-based economist for Societe Generale SA. “The growth momentum seems to be stabilizing but still vulnerable.”

Slowing overseas sales and Premier Wen Jiabao’s pledge to maintain curbs on the property market may see growth drop to 7.5 percent this quarter, according to Nomura Holdings Inc. That would be the least since the global financial crisis.

In contrast, Lu Ting at Bank of America Corp. expects first-quarter expansion of 8.6 percent.

Wen said economic-policy fine-tuning needs to begin this quarter, Xinhua reported on Feb. 12.

Economists combine data for the first two months to smooth distortions caused by the timing of the weeklong Lunar New Year holiday. The festival fell in January this year and February last year.

--Zheng Lifei. With assistance from Ailing Tan in Singapore, Regina Tan and Huang Zhe in Beijing. Editors: Scott Lanman, Nerys Avery

To contact Bloomberg News staff for this story: Zheng Lifei in Beijing at lzheng32@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net

http://www.bloomberg.com/news/2012-03-01/china-manufacturing-increases-for-third-month-as-global-prospects-improve.html

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