Demand surges in China and India

03 November 2010

BEIJING: Manufacturing output increased sharply in both China and India last month, with growth fuelled by rising consumer demand.

Latest HSBC China manufacturing PMI data show that Chinese manufacturing surged in October for the third successive month.

HSBC said the rate of expansion for Chinese manufacturing companies was at a six-month high, despite a relatively small increase in export orders.

This suggests that growth was firmly centred on the domestic market.

But the Chinese and Indian numbers contrasted sharply with PMI reports for South Korea, Taiwan and Japan, all of which are experiencing a slowdown following a period of rapid growth.

The HSBC Taiwan index dropped to 48.6 from 49 in September, the third monthly decline in a row.

Within these results, the bank's index for South Korea fell to 46.7 from 48.8, while the Nomura Japan manufacturing PMI, released on Friday, fell to 47.2 from 49.5.

Commentators believe that the second monthly contraction in a row suggests that slowing economic conditions and the strong yen are damaging the prospects of many Japanese manufacturers.

Hongbin Qu, HSBC's chief China economist, said the upbeat numbers for China suggested that the economy would grow at an annualised rate of around 9% in the fourth quarter of the year.

He said the figures for China were ahead of expectations, reinforcing the view that the economy has picked up after fears of a slowdown in the summer.

But the input price indicator in the China PMI also rose last month, suggesting that inflation in the country could continue to soar.

Data sourced from Financial Times; additional content by Warc staff