China Leading Economic Index Rises for Seventh Month

An indicator of China’s economic outlook rose for a seventh month, signaling the world’s fastest-growing major economy is withstanding monetary tightening.

The Conference Board’s leading index rose 0.5 percent to 155.4 in November, the New York-based research organization said on its website today, citing a preliminary report. That compared with a revised advance of 0.8 percent in October.

The gain “suggests continuing growth through the first half of 2011,” said Bill Adams, resident economist for The Conference Board China Center in Beijing. “November’s increase in the leading index for China reflects modest improvements in real estate offsetting ongoing consumer pessimism.”

Premier Wen Jiabao’s government formally shifted to a “prudent” monetary policy last month to curb the highest inflation in 28 months and crack down on speculation that’s made home ownership unaffordable for an increasing proportion of the population. Consumers are more concerned about rising costs than at any time in the past decade, the central bank said last month, and the nation’s planning agency said yesterday it may impose more measures to curb prices if needed.

The Conference Board’s coincident economic index for China, a measure of current activity, increased 1.1 percent in November to 197.9 after gaining a revised 0.2 percent in October.

Benchmark Revision

The Board today revised the leading index figures for May through September due to “annual benchmark revisions,” it said in the release, adding that these won’t change the “cyclical” trend of the indicators.

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.

Five of the six components contributed positively to the index in November, according to today’s statement.

The Conference Board first published its leading economic index for China in May after four years of development and says it is designed to capture the outlook over the coming six months. The organization says that plotted back to 1986, the index has successfully signaled turning points in China’s economic cycle.