China Manufacturing Hits Six Month High

Nov. 1, 2010
Analysts have said the data showed success in efforts to steer the country towards more sustainable growth, less dependent on exports.

The HSBC China Manufacturing purchasing managers index (PMI) rose to 54.8 in October from 52.9 in September as production and new orders continued to rise. It represented a six-month high.

An official survey from the China Federation of Logistics and Purchasing (CFLP) showed that PMI rose to 54.7 last month from 53.8 in September.

Analysts have said the data showed success in efforts to steer the country towards more sustainable growth, less dependent on exports. The pick-up in manufacturing activity in October showed that "the economy has likely stabilized further at a high level," government analyst Zhang Liqun said.

Hong Kong-based HSBC chief economist Qu Hongbin attributed the upbeat reading to "strong growth momentum in domestic demand", noting that new export orders had only modestly increased. "The jump in output prices reflects higher input costs amidst strong demand, which also heralds a higher CPI likely to reach its cyclical peak in October," Qu said.

China's economy grew 9.6% year-on-year in the third quarter, down from 10.3% in the second quarter and 11.9% in the first as government efforts to rein in property prices and bank lending started to bite.

The closely watched consumer price index, a key measure of inflation, rose 3.6% in September from a year earlier, the fastest pace since October 2008, and 0.6 percent higher than the previous month, official data showed.

The People's Bank of China last month raised one-year lending and deposit rates for the first time in nearly three years as Beijing ramped up efforts to contain rising inflation and cool the red-hot real estate market.

Central bank governor Zhou Xiaochuan has warned that the risks of excessive liquidity, inflation, asset bubbles and bad loans will "increase significantly".

Copyright Agence France-Presse, 2010

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