China's Manufacturing Activity Expands In October: Official PMI

 
on October 31 2012 10:55 PM

China's manufacturing activity expanded in October after two months of contraction, giving indication that the second-largest economy is reviving its growth momentum.

Data released Thursday morning by the China Federation of Logistics & Purchasing showed that the Purchasing Managers' Index rose to 50.2 in October from 49.8 in September. Significantly, the index moved into the expansion zone, a reading  above 50. The expansion of the manufacturing activity should allay fears of a sharp retardation in the Chinese economy.

Meanwhile, according to the HSBC Purchasing Managers Index released Thursday, the final reading of the PMI, a measure of the nationwide manufacturing activity, rose to 49.50 in October from 47.9 in September. However, since the PMI is below 50, it indicates that the manufacturing economy is declining.

“October’s final PMI rose to an eight-month high, implying that China’s industrial activity continues to bottom out following a modest pickup last month. This is mainly driven by the increase of new orders, thanks to the filtering through of the earlier easing measures, while exports outlook remains challenging,” said Hongbin Qu, chief economist for China and co-head of Asian Economic Research at HSBC.

It also was reported this month that China’s industrial production rose in September compared to August, indicating an upswing in the manufacturing output. The data released by the National Bureau of Statistics of China showed that the country’s industrial production rose to 9.2 percent in September, up from 8.9 percent in August.

Earlier this month it was reported that, the rate of inflation in China slowed in September, showing signs of a gradual decline in price pressure to make room for monetary easing. Data from the National Bureau of Statistics showed that the consumer price index of China rose 1.9 percent in September from a year earlier, down from 2 percent in August. The diminishing inflation should be good news, because it can help the government invigorate growth without much concern about rising prices.

China's gross domestic product growth slowed down to 7.4 percent in the third quarter, down from 7.6 percent in the second quarter, due to soft global demand and reduced real estate investment in the world's second largest economy. The government has already lowered its economic growth target in 2012 to 7.5 percent. In 2011 and 2010, the economy grew at the rate of 9.2 percent and 10.4 percent, respectively.

 

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