Factory activity expands further

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 lead the global recovery.

India's manufacturing industry expanded for the seventh month while South Korea, Asia's fourth-largest economy, posted an eighth 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," said Qu Hongbin, chief China economist at HSBC in Hong Kong.

Many economists believe China will drive the global rebound after the world's third-largest economy grew an annual 8.9 per cent in the third quarter on the back of a big government stimulus.

HSBC said its China Purchasing Managers' Index (PMI) rose to an 18-month high in October to 55.4 from 55.0 in September. A reading above 50 means business activity expanded.

Combined with a PMI released by the National Bureau of Statistics, the surveys point to an acceleration in annual GDP growth to double digits in the fourth quarter, said Wensheng Peng and Jian Chang with Barclays Capital in Hong Kong.

Economists polled by Reuters expect manufacturing in the Eurozone to return to growth while expansion is expected to pick up steam in the US.

Pump-priming and interest rate cuts have lifted economies.

 

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