--Global air passenger traffic on track for double-digit growth this year

--China's domestic market has driven the broader recovery

--Airline business viewed as leading indicator of broader economic growth

Global airline passenger traffic remains on track for double-digit growth this year as a rebounding Chinese market leads broader expansion by carriers in Asia and the Middle East, according to data published Wednesday.

The growth in flying has almost doubled over the past five months from the sluggish rates seen in the first half of last year, though cargo traffic remains sluggish and big domestic markets including India, China and Brazil continue to shrink, according to the International Air Transport Association.

The airline business is viewed as a leading indicator of broader economic growth, and the Geneva-based trade group said global passenger traffic rose 3.7% in February from a year earlier and was up 1.2% from January, outstripping the rise in capacity and taking the average load factor--the percentage of seats filled--to a record high.

China's domestic market has driven the broader recovery, with traffic surging 20.2% in February, or 13% after stripping out the effect of the lunar new year--traditionally, a big booster of leisure travel--that fell in January last year.

Other big domestic markets continued to shrink, with U.S. carriers cutting capacity to boost pricing power while cautioning that automatic budget cuts are starting to hurt business. US Airways Group Inc. (LCC) on Wednesday reiterated the warning given by larger rival Delta Air Lines Inc. (DAL) that the so-called sequester was hurting late bookings, which usually command higher fares.

U.S. carriers have led the global industry in trimming capacity to match demand, and analyst Daniel McKenzie at Buckingham Research Group on Wednesday flagged further planned cuts for the upcoming northern hemisphere summer season, traditionally the industry's peak period for travel and earnings.

"Capacity has come out of the industry and is mostly staying out," Mr. McKenzie said in a note to clients.

Buckingham's analysis shows U.S. and European airlines returning to modest growth in the second quarter after shrinking in the first three months of the year, while big Middle East and Asian carriers--plan more rapid expansion.

China's big airlines are leveraging the more robust domestic market to boost international growth. Air China Ltd. (0753.HK, 601111.SH) is boosting the number of seats offered to the U.S. by 55% in the second quarter compared with a year earlier, while China Southern Airlines Co. (1055.HK, 600029.SH, K3TD.SG) is adding 73% more capacity, according to Buckingham.

Write to Doug Cameron at Doug.Cameron@dowjones.com

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04-03-13 1255ET