China manufacturing sector expands further in October, but recovery remains gradual
(Reuters) – China’s giant manufacturing sector strengthened further in October, two surveys showed on Friday, though mixed signals in important areas including export orders suggest any recovery in the world’s second-largest economy will be gradual.
The overall message of stabilization is good news for the government as it readies a series of economic reforms at the Communist Party’s third plenary meeting from November 9-12.
China’s official Purchasing Managers’ Index (PMI) reached an 18-month high of 51.4 in October, beating a forecast of 51.2 in a Reuters poll [ID:nL3N0IJ3MW]. A separate HSBC/Markit final PMI rose to a seven-month high of 50.9.
Both surveys were above the 50 line separating growth from contraction, but gave differing readings on new orders and new export orders — falling in the official PMI and rising in the HSBC/Markit PMI.
“The PMI data for October shows a continued increase, indicating a preliminary stabilization in the economy,” Zhang Liqun, an economist at the cabinet think-tank Development Research Center, said in a statement released with the official PMI.
“The foundation for a recovery is not yet solid,” Zhang said, noting that order, inventory and purchasing price sub-indices decreased, “making it clear that companies are still rather cautions about the future outlook.”
The official PMI is weighted more towards bigger and state-owned enterprises, while the HSBC/Markit survey focuses more on smaller and private sector firms.