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November 2, 2009

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China's PMI rises fastest in October

CHINA'S Purchasing Managers Index, a gauge of the nation's manufacturing activities, rose at the fastest pace in 17 months in October when it expanded to 55.2, up from 54.3 in September, the China Federation of Logistic and Purchasing said yesterday.

The PMI, which includes forward-looking elements such as orders for future sales, has been hovering above 50 for eight straight months. It was also the sixth consecutive month that the reading had increased, indicating that China's economic recovery had steadily become more solid.

"The continued rise in China's PMI suggests the economy will continue to grow soundly," said Zhang Liqun, a researcher at the State Council's Development Research Center. "The domestic demand keeps growing significantly while the reading for new export orders signals that exports may start to recover too."

The PMI sub-index for production climbed to 59.3 in October, up from 58 in September.

The reading for new orders hit 58.5 last month, up from 56.8 a month earlier while new export orders rose to 54.5 from 53.3, indicating a continued pick-up in external demand.

"The rising new export orders are a clear reflection of a recovery in exports and indicates growth in exports may turn positive in the fourth quarter or the first quarter next year," the CFLP said in a statement posted on its Website.

The slump in exports continued to ease in the second half of the year, with September posting the smallest drop of 15.2 percent this year.

So far, China's economy has shown a V-shaped recovery boosted by massive government investments and a credit surge, as the gross domestic product accelerated to 8.9 percent in the third quarter. The GDP grew 7.9 percent in the second quarter and climbed 6.1 percent in the first quarter.

"The economic growth is expected to accelerate to 9.5 percent in the fourth quarter judging from the improved exports and fast increasing domestic demand," said Zhang.


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