by Staff Writers
Hong Kong (AFP) Nov 01, 2013
Asian manufacturing picked up pace in October, figures showed on Friday, with Chinese activity at an 18-month high but analysts warned that background data indicates fresh headwinds in the coming months.
The broad pick-up will come as good news for the region after a tough few months caused by uncertainty over the US Federal Reserve's stimulus scheme -- which has supported investment in emerging nations.
China provided the stand-out data, with the official purchasing managers' index (PMI) hitting 51.4 last month from 51.1 in September.
The reading from the National Bureau of Statistics (NBS), is the highest since 53.3 in April 2012. Anything above 50 indicates expansion while a figure below signals contraction.
Also Friday, British bank HSBC said its PMI had hit a seven-month high of 50.9 in October, unchanged from a preliminary reading last week, but much higher than its September figure of 50.2.
The numbers add to a growing feeling that China -- a key driver of global and regional economic growth -- was gradually moving out of a slowdown that has lasted most of the year.
China's economy expanded 7.8 percent in July-September, snapping two quarters of growth, while trade and investment have also shown a general improvement.
"China is on track for a gradual growth recovery," HSBC chief economist for China Qu Hongbin said in the bank's release, while ANZ bank economists Liu Li-Gang and Zhou Hao said the figures suggest "the economy is still in an expansion mode".
However, government and independent analysts warned underlying data suggests economic weaknesses remain.
Zhao Qinghe, a researcher at China's National Bureau of Statistic, said on its website: "The forces driving up the PMI reading were imbalanced as the rebound in subindexes other than output remained relatively weak."
And Bank of America Merrill Lynch economists called the official figures "above consensus", adding "further improvement ... is limited".
They said the gain was mostly fuelled by higher output owing to a pick-up in the economy as well as inventory restocking, while new orders, including for exports, slowed.
The news was similar elsewhere.
In Indonesia HSBC said its PMI rose to 50.9, its highest level in four months, from 50.2 in September, driven by a rebound in new work. But HSBC economist Su Sian Lim said: "But the ongoing contraction in work backlogs suggests that overall demand-pull pressures in the economy continue to weaken."
In India, manufacturing continued to shrink, with the HSBC index unchanged at 49.6. The figures add to growing concerns about growth, which has been held back by an exit of foreign cash, economic mishandling, bureaucratic red tape and corruption.
Exporters were boosted by a weaker rupee -- making their goods cheaper abroad -- but importers had to pay more for their inputs. HSBC said input cost inflation hit a 16-month high in October while prices charged by manufacturers rose at their fastest pace since February.
And in Taiwan its PMI fell to 51.6 from 52.6.
South Korea, however, was more upbeat, its PMI jumping into positive territory in October -- hitting 50.2 from September's 49.7 -- while exports rose 7.3 percent, turning around a decline from a year before.
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