Manufacturing strengthens to 18-month high in steady upward trend

By Wang Yanlin | November 1, 2013, Friday |

Online Edition

CHINA'S manufacturing activity strengthened to an 18-month high in October, better than expected and indicative of sustained growth momentum in the world's second-largest economy.

The official Purchasing Managers' Index, a comprehensive gauge of operating conditions in China's industrial companies, increased to 51.4 last month, the China Federation of Logistics and Purchasing said this morning.

The pace advanced from September's 51.1 and August's 51, rising to the fastest level since May 2012.

A reading above 50 means expansion, and October marked an index rebound for the fourth consecutive month.

"China's manufacturing activities are seeing a steady upward trend," according to a federation statement.

The components showed that production picked up to 54.4 in October, up from 52.9 a month earlier. But new orders lost by 0.3 points to 52.5 and new export orders also decreased to 50.4, down 0.3 points from the previous month.

Along with the official PMI, the HSBC Purchasing Managers' Index, which gauges conditions in mostly private and export-oriented manufacturers, posted at 50.9 in October, the strongest in seven months, unchanged from its earlier flash reading and up from 50.2 in September.

Qu Hongbin, chief economist for China at HSBC Holdings plc, said the final HSBC PMI reading rose from the stronger momentum of manufacturing growth and translated into the first expansion of employment since March.

"This in turn should support private consumption growth in the coming months," Qu said. "China is on track for a gradual growth recovery."

China's gross domestic product growth accelerated to 7.8 percent in the third quarter, up from the increase of 7.5 percent in the second quarter and indicating a steady growth pace.

China has carried out a string of supportive measures since May to balance short-term growth stability and medium-term risk mitigation. Supportive policies, such as tax reductions for small companies and more investment in railways, which were dubbed a mini-stimulus, have helped to invigorate the economy in the past few months.

Manufacturing

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Manufacturing strengthens to 18-month high in steady upward trend

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