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Chinese Manufacturing Picks Up in October

Key index rises slightly for the month, indicating recovery.

CHINA — China’s purchasing managers index rose slightly in October, signaling 
the start of a rebound for the world’s second largest economy.

China’s National Bureau of Statistics said Thursday that the PMI,
 which measures manufacturing, nosed up just to 50.2. It is the first 
reading above the 50 level indicating expansion since the summer.

The October numbers are an improvement from September’s PMI of 49.8
 PMI, and August’s reading of 49.2.

A private sector survey of PMI by investment bank HSBC also saw an 
increase, although somewhat less than the government figures. HSBC saw 
PMI rise in October to 49.5, up 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,” HSBC economist Hongbin Qu wrote in HSBC’s report. New orders were mainly responsible for the rise, he said.

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The numbers brought some positive reactions. “The view in the market 
is mixed over whether or not economic growth can rebound” in the
fourth quarter, Nomura economists wrote in a note. “But we believe the 
improvement in the PMI indexes suggest growth momentum has indeed
 picked up.”

Jian Chang, an economist with Barclays, said the October improvement
 “confirms that the growth stabilization we expect is on track,” and
 that it reflects “slowly and continuously improving demand and more 
accommodative monetary and financing conditions.” It seems less
 likely, in fact, that the government will step in to cut interest
 rates or the reserve requirement, she said. In June and July, the
 Chinese central bank cut interest rates, signaling concern that the
 economy was slowing faster than Beijing thought was prudent.