China’s official Purchasing Managers’ Index (PMI) for October was 51.4, a slight increase over September’s figure of 51.1.
As The Business Spectator notes, this is the best result for seven months.
The PMI is a measure of activity in factories and workshops. A reading greater than 50 indicates an expansion, while a reading under 50 indicates a contraction of activity.
Meanwhile, Reuters reports that the final HSBC/Markit PMI for OCtober was 50.9. This was an increase over the figure of 50.2 for September. This result means the manufacturing sector grew at its fastest rate in seven months in October.
The difference between the two PMI figures is that the official figure is weighted more towards larger state owned enterprises, while the HSBC/Markit figure places a larger emphasis on smaller firms and those from the private sector.
The good result for October will be welcomed by Beijing. The government has an agenda to restructure the economy with more emphasis on consumer demand and less emphasis on investment and credit.
A strengthening economy will make it easier for the government to pursue this agenda at the Communist Party’s third plenary meeting which will take place from November 9 to November 12.