China October official PMI set to confirm recovery trend

Mon Oct 29, 2012 11:06pm EDT
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BEIJING (Reuters) - China's factory activity likely accelerated in October to its fastest pace in five months, according to a new Reuters poll that reveals a growing certainty of recovery taking hold in the world's second-biggest economy.

The poll of 14 economic analysts forecasts that China's official purchasing managers index (PMI) rebounded to 50.3 in October from 49.8 in September, a reading that suggests factory output is accelerating again after two months of slowing growth.

"I think the October PMI will help support our expectation for a better economic performance in the fourth quarter than in the third," said Wang Jin, a macro economic analyst at Guotai Junan Securities in Shanghai.

"Signs of a stabilizing external demand, faster infrastructure investment and a thawing property market all bolster a recovery in factory activity," he added.

The 50-point line demarcates expanding from contracting activity in PMI survey methodology.

In China's economy, where industrial output grew at a 9.2 percent annual pace in September, the rise above 50 suggests an acceleration of output that will help lift fourth-quarter GDP growth above the 7.4 percent annual rate achieved in the third quarter.

The expectations of a pick-up in the official PMI, which captures information principally from China's biggest, state-owned enterprises, follow a private-sector PMI survey last week.

The HSBC China flash PMI, which gathers more data from smaller, privately-held firms that have a strong export focus, signaled manufacturing activity at three-month high with a reading of 49.1, reflecting a slow but steady recovery in the economy.

The third quarter's 7.4 percent GDP growth rate marked the first miss of the government's official target since the 6.5 percent seen in the first quarter of 2009, and leaves the economy on course for its slowest full year of growth since 1999.   Continued...

Labourers work at a steel factory in Dalian, Liaoning province July 13, 2012. REUTERS/China Daily