China: PMI unexpectedly rises in October
October 31, 2010
The October Purchasing Managers' Index (PMI) from the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing (CFPL) rose by 0.9 percentage points over September to 54.7%. The figure contrasted market forecasts, which had seen the index sliding to 52.9%. At the current level, the index remains above the 50% threshold since March 2009. A reading above 50% indicates that the manufacturing sector is expanding, while a reading below 50% implies a contraction. The improvement was driven by the purchasing prices category, which has been experiencing an upward trend in the last three months. A jump in the prices sub-index reflects increasing production costs, suggesting that prices are likely to spike going forward, as higher costs are passed through consumers in a context of resilient domestic demand. The government expects economic growth to moderate to 8.7% in the fourth quarter, which is widely in line with the Consensus Forecast. For the full year, the panel anticipates GDP expanding 10.0%, which is up 0.1 percentage points over last month's estimate. In 2011, growth is likely to moderate to 9.0%.