De­mand for ex­ports sees PMI pick­ing up

China’s man­u­fac­tur­ing grow­ing

Weekend Argus (Saturday Edition) - - BUSINESS -

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.

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