China set to lead global recovery, say economists
The Hindu Business Line, November 3, 2009, Page 11
Growth in India, South Korea continues but at slower pace
BEIJING, Nov 2 (Reuters) - Factory activity in Asia picked up further in October, with growth in China hitting its fastest in 18 months, suggesting the continent is on an economically solid footing and will likely lead the global recovery.
India's manufacturing industry expanded for the seventh month while South Korea, Asia's fourth largest economy, posted an eight straight month of growth although the pace slowed in both countries.
Activity of China's manufacturers also expanded for the seventh month, boosted by a pick up in employment and export order growth, according to a survey compiled by British research firm Markit and published by HSBC.
"We believe the ongoing strong recovery in the manufacturing sector should gain further momentum in the coming months, hence underpinning strong economic growth in the fourth quarter," Qu Hongbin, chief China economist at HSBC in Hong Kong, said in a statement.
Many economists believe China will drive the global rebound after the world's third-largest economy grew an annual 8.9 percent in the third quarter on the back of a big government stimulus.
HSBC said on Monday its China Purchasing Managers' Index (PMI) rose to an 18-month high in October of 55.4 from 55.0 in September. A reading above 50 means business activity expanded.
EURO AREA SET TO RETURN TO GROWTH
Combined with a PMI released by the National Bureau of Statistics on Sunday, the surveys point to an acceleration in annual gross domestic product growth to double digits in the fourth quarter, said Wensheng Peng and Jian Chang with Barclays Capital in Hong Kong.
The euro zone PMI will be released at 0858 GMT, while the Institute for Supply Management is due to announce the U.S. manufacturing index at 1500 GMT.
Economists polled by Reuters expect manufacturing in the euro zone to return to growth while expansion is expected to pick up steam in the United States.
Pump-priming by governments and interest rate cuts by central banks have lifted economies from the troughs hit during the crisis, but there are signs that the pace of the recovery may be slowing.
In South Korea, exports fell 8.3 percent in October from a year earlier, weighed down by weak U.S. demand while consumer price inflation slowed more than expected to 2 percent in the year to October.
The HSBC/Markit survey showed South Korea PMI fell to a seasonally adjusted 52.5 in October from 52.7 in September but HSBC senior Asian economist Frederic Neumann said the economy remained on track for steady growth.
"After a strong run over the summer, the Korean economy has started to settle into a more comfortable growth path," he said.
India's PMI also eased a touch to 54.5 last month from 55 in September but it still pointed to a robust growth in industrial production of around 8-10 percent on an annual basis, said HSBC senior Asian economist Robert Prior-Wandesforde.
"If falls in the output and total new orders indices were a touch disappointing, a rise in the employment index back above 50.0 and a decent improvement in the new export orders index to its highest level since August last year offered welcome news."
Growth in domestic new orders may be beginning to suffer from the impact of a drought, but stronger foreign demand was helping to cushion the blow, Prior-Wandesforde concluded.
The Hindu Business Line, November 3, 2009, Page 11
Growth in India, South Korea continues but at slower pace
BEIJING, Nov 2 (Reuters) - Factory activity in Asia picked up further in October, with growth in China hitting its fastest in 18 months, suggesting the continent is on an economically solid footing and will likely lead the global recovery.
India's manufacturing industry expanded for the seventh month while South Korea, Asia's fourth largest economy, posted an eight straight month of growth although the pace slowed in both countries.
Activity of China's manufacturers also expanded for the seventh month, boosted by a pick up in employment and export order growth, according to a survey compiled by British research firm Markit and published by HSBC.
"We believe the ongoing strong recovery in the manufacturing sector should gain further momentum in the coming months, hence underpinning strong economic growth in the fourth quarter," Qu Hongbin, chief China economist at HSBC in Hong Kong, said in a statement.
Many economists believe China will drive the global rebound after the world's third-largest economy grew an annual 8.9 percent in the third quarter on the back of a big government stimulus.
HSBC said on Monday its China Purchasing Managers' Index (PMI) rose to an 18-month high in October of 55.4 from 55.0 in September. A reading above 50 means business activity expanded.
EURO AREA SET TO RETURN TO GROWTH
Combined with a PMI released by the National Bureau of Statistics on Sunday, the surveys point to an acceleration in annual gross domestic product growth to double digits in the fourth quarter, said Wensheng Peng and Jian Chang with Barclays Capital in Hong Kong.
The euro zone PMI will be released at 0858 GMT, while the Institute for Supply Management is due to announce the U.S. manufacturing index at 1500 GMT.
Economists polled by Reuters expect manufacturing in the euro zone to return to growth while expansion is expected to pick up steam in the United States.
Pump-priming by governments and interest rate cuts by central banks have lifted economies from the troughs hit during the crisis, but there are signs that the pace of the recovery may be slowing.
In South Korea, exports fell 8.3 percent in October from a year earlier, weighed down by weak U.S. demand while consumer price inflation slowed more than expected to 2 percent in the year to October.
The HSBC/Markit survey showed South Korea PMI fell to a seasonally adjusted 52.5 in October from 52.7 in September but HSBC senior Asian economist Frederic Neumann said the economy remained on track for steady growth.
"After a strong run over the summer, the Korean economy has started to settle into a more comfortable growth path," he said.
India's PMI also eased a touch to 54.5 last month from 55 in September but it still pointed to a robust growth in industrial production of around 8-10 percent on an annual basis, said HSBC senior Asian economist Robert Prior-Wandesforde.
"If falls in the output and total new orders indices were a touch disappointing, a rise in the employment index back above 50.0 and a decent improvement in the new export orders index to its highest level since August last year offered welcome news."
Growth in domestic new orders may be beginning to suffer from the impact of a drought, but stronger foreign demand was helping to cushion the blow, Prior-Wandesforde concluded.
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