China’s economy grows after three months of worrying falls
Published 24/10/2011 | 08:45
CHINA’S vast manufacturing sector picked up in October, after three months of falls, supported by strong domestic demand.
The rise in the HSBC's China Flash Purchasing Managers' Index could cool investor fears of an abrupt slowdown, or hard landing, in China's economy that could send an already fragile world economy into a recession.
The PMI rose to 51.1 in October from September's 49.9. This was the first time the figure was above 50 - which signals growth - since June.
"Thanks to the pick-up in new orders and output, the headline flash PMI rebounded back into expansionary territory during October, marking a steady start to manufacturing activities in the fourth quarter," said Qu Hongbin, China economist at HSBC.
"Meanwhile, inflation components within the PMI results confirmed stable output prices growth and slower input price inflation.
‘’All these data confirm our view that there is no risk of a hard landing in China," he added.
China is vulnerable to fading demand from the US and Europe, its two biggest export markets, but robust domestic demand - consumption and investment -- and solid export growth to emerging markets have provided some insulation.
China's annual economic growth slowed to 9.1pc in the third quarter from 9.5pc in the second quarter and 9.7pc in the first. Most analysts believe the data point to an economic soft landing, rather than a crash.
In comments published on Sunday, Premier Wen Jiabao said the government will make job creation a more urgent priority in the face of slowed economic growth and weakened exports.