Demand for exports sees PMI picking up

China’s manufacturing growing

BEIJING: Demand for exports drove the fastest upturn in Asia’s factories in months during last month, led by China, as yesterday’s business surveys also showed UK manufacturers still expanding.

The latest batch of purchasing managers’ indices (PMIs), which survey thousands of manufacturers globally, showed Chinese factory growth hitting an 18- month high, and British factories sustaining a solid rate of expansion.

Although data from the US, which was due later yesterday, are expected to show a slight slowdown in industrial growth, taken together the PMIs point to a gradual improvement in global economic activity.

They follow a month in which a political stand-off in Washington over the US debt ceiling and the sixth consecutive cut in International Monetary Fund global economic forecasts had raised fresh concerns about the health of the global economy.

“Overall, the data is positive for global demand,” said Radhika Rao, an economist with DBS in Singapore. “There are reasons to be optimistic, but cautiously optimistic.”

The raft of Asian PMIs showed why.

Taiwan’s PMI reached its highest level since last March, Indonesia’s index hit a fourmonth high and Japan’s PMI rose to its strongest level in well over three years.

The major Asian economies of China, Japan, South Korea and India reported new export orders expanding simultane-

With the domestic economy recovering strongly, all important export markets are either growing or at least improving

ously for the first time since May, which economists attributed partly to the gradual improvement in Europe.

Most major European PMIs, including that for the euro zone, come next week because of a holiday. But Britain, which has been at the forefront of Europe’s tentative economic recovery, saw continued growth.

Data company Markit said its October UK manufacturing PMI edged slightly lower to 56.0 points from a downwardly revised 56.3 in September. But anything over 50 means expansion and the latest number remains within striking distance of August’s two- year peak of 57.1.

“With the domestic economy recovering strongly, all important export markets are either growing or at least improving, and a broadly stable exchange rate, output in this key sector looks set to contribute its share to the recovery,” said Christian Schulz, senior economist at Berenberg.

China’s official PMI rose to 51.4 last month from 51.1 in September, topping expectations for a reading of 51.2.

A similar report from HSBC/ Markit increased to 50.9 points, a seven- month high. It showed a tick-up in the pace of new domestic and export orders, as well as the first increase in employment in seven months.

“The PMI data for October shows a continued increase, indicating a preliminary stabilisation in the economy,” Zhang Liqun, an economist at the cabinet think-tank Development Research Center, said.

China’s reassuring PMI reading limited losses in Asian stocks, which were under pressure after strong US data added to uncertainty over when the US Federal Reserve might begin to ease back on its stimulus.

India was the exception among a group of generally upbeat PMI reports in Asia. Its HSBC/ Markit PMI was unchanged at 49.6 last month, indicating the sector was contracting for a third month, despite rising export orders.

The HSBC/Markit PMI for South Korea showed factory activity expanded for the first time in five months in October and a separate report said the value of exports in the month beat expectations to hit a high of $50.5 billion (R503.3bn).

Factory activity in Taiwan, key to many global tech supply chains, was running at its fastest pace since last March, while Japan reported on Thursday that factory activity grew at the fastest pace in more than three years. – Reuters

PICTURE: AP RIGHT STUFF: Shopping mall employees dressed as Santa Claus pose with a visitor under a Christmas tree, at the start of their special event to promote business in coincidence with the upcoming yuletide season in Seoul, South Korea.