China's Leading Economic Index Rises for Fifth Month as Growth Stabilizes

An indicator of China’s economic outlook rose for a fifth month in September, adding to evidence the nation’s expansion has stabilized.

The Conference Board’s leading index rose 0.6 percent to 150.8, according to a preliminary report from the New York-based research organization, posted on its website today. The reading compared with a gain of 0.7 percent in August.

The gains “suggest the economy is likely to expand steadily through early 2011,” said William Adams , resident economist for The Conference Board China Center in Beijing. “However, weakening consumer sentiment and tighter monetary policy may be a concern going forward.”

A more-than-forecast acceleration in inflation to 4.4 percent, announced Nov. 11, stoked speculation that the central bank may further tighten monetary policy as the Chinese economy maintains momentum. Interest rates will rise again before year- end after an increase in October that was the first since 2007, according to a Bloomberg News survey of economists.

The Conference Board’s coincident economic index for China, a measure of current activity, increased 0.7 percent in September to 191.6 after gaining 1 percent in August.

October’s inflation rate was higher than analysts’ estimates, while third-quarter economic growth was 9.6 percent from a year earlier. Besides raising rates, the central bank has ratcheted up lenders’ reserve requirements and scrapped a crisis policy of pegging the yuan to the dollar.

The six components of the leading index are loans by financial institutions, raw-material supplies, deliveries and new export orders information from the manufacturing purchasing managers’ index, consumer expectations, and total floor space started. The central bank publishes the first two components and the statistics bureau releases the other four.

--Sophie Leung, Paul Panckhurst. Editors: Paul Panckhurst, Lily Nonomiya