Manufacturing activity in China hit a five-month high this month, lifted by a pick-up in output and orders despite global economic turmoil, HSBC said yesterday.
The preliminary HSBC purchasing managers’ index (PMI) stood at 51.1 this month, up from 49.9 last month and the first time it has gone above 50 since June, the British banking giant said in a statement.
A reading above 50 indicates the sector is expanding, while a reading below 50 suggests a contraction.
The final PMI reading for this month is due to be released on Nov. 1.
HSBC chief economist Qu Hongbin (屈宏斌) said the latest data indicated China’s economy was not headed for a hard landing, despite slowing export growth and tight credit conditions aimed at curbing inflation.
“Thanks to the pick-up in new orders and output ... PMI rebounded back into expansionary territory during October, marking a steady start to manufacturing activities in the fourth quarter,” he said in the statement.
The PMI figures also showed a slowing in input prices, a measure of the cost of raw materials, he said, indicating government steps to rein in high inflation might be making an impact.
China’s benchmark consumer price index rose 6.1 percent year-on-year last month, slowing only marginally from a 6.2 percent rise in August, but retreating from a more than three-year high of 6.5 percent in July.
Tao Dong (陶冬), a Hong Kong-based economist with Credit Suisse, said the PMI figures were better than expected, but cautioned that the world’s second-largest economy may slow further.
“I think China’s economic growth will continue to slow down, which means [further] tightening measures are rather unlikely for the time being,” he said.
China’s economic growth eased to 9.1 percent in the third quarter from 9.5 percent in the second quarter as government efforts to tame inflation and economic turbulence in Europe and the US curbed activity.
The Ministry of Commerce has warned of a “severe” outlook for foreign trade in the coming months after official data showed year-on-year export growth slowed to 17.1 percent last month from 24.5 percent in August.
China is also under intense pressure from the US to let the yuan strengthen at a faster pace.
China says currency controls are necessary to protect its manufacturing sector, which employs millions of workers, but the US Senate this month approved a bill that would punish China for alleged manipulation.
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