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China manufacturing experiences spike after slump

By Catholic Online (NEWS CONSORTIUM)
November 1st, 2012
Catholic Online (www.catholic.org)

After a three-month slump, productivity and manufacturing in China has enjoyed a spike. While things seem to be on an even keel now, there still lingers the three slowest months ever that the Asian giant experienced earlier this year.

LOS ANGELES, CA (Catholic Online) - The Purchasing Managers' Index (PMI) rose to 50.2 last month from 49.8 in September, government data showed. China's economy has suffered as requests for its export goods in other markets have suffered.

The brighter economic outlook comes a week before the once-in-a-decade leadership change.

China's economy expanded 7.4 percent in the July to September period, which was its slowest pace in three years. Manufacturing activity contracted in August and September, among the backdrop of this larger economic slowdown.

Chinese policymakers "have stepped up to the plate" by taking steps to boost economic growth by way of infrastructure spending and monetary easing.

Analysts said those moves were starting to affect the economy positively. "The return of the PMI to above 50 suggests economic momentum has indeed picked up," Zhiwei Zhang of Nomura said in an email.

"It indicates the effect of policy easing may have been stronger than the consensus expected."

Other data pointing towards a recovery includes acceleration in exports, retail sales and industrial production.

A separate, private survey of manufacturing in China by HSBC also showed an improvement, although the reading remained in negative territory.

The HSBC purchasing managers' index showed a final reading of 49.5 in October, which was an increase from 47.9 in September.

"October's final PMI rose to an eight-month high, implying that China's industrial activity continues to bottom out following a modest pick-up last month," Qu Hongbin, chief China economist at HSBC, said in a statement.

How China's leaders handle the slowdown has been a political balancing act for China's leaders as they embark on a leadership change.

Strong growth has long been a point of pride for the current leaders, and analysts pointed out they would be eager to get the economy back on track before the handover.

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