Reuters reports on the latest PMI (Purchasing Managers Index) numbers:
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Manufacturing growth in India and China powered ahead last month and U.S. industry also picked up steam, according to data on Monday that suggested the global economic recovery may be on firmer footing.
China’s official purchasing managers’ index (PMI) rose to a six-month high in October of 54.7 from 53.8 in September, easily beating market forecasts of 52.9.
The strength of China’s official PMI was especially striking because the index normally heads down in October, said Yu Song and Helen Qiao, economists at Goldman Sachs. “The fact that the PMI went up despite this seasonal bias suggests real activity growth was likely to have been exceedingly strong in October,” they said in a note. The survey showed manufacturers continued to run down stocks last month to meet rising domestic orders. “These readings bode well for a recovery of output in coming months,” Ting Lu at Bank of America Merrill Lynch told clients. A companion PMI produced by Markit for HSBC painted a similar picture, rising to 54.8 from 52.9 — one of the largest month-on-month rises in the history of the survey.
Manufacturing in India — Asia’s other emerging powerhouse — put in a performance every bit as strong as China’s. India’s manufacturing was supported by strong domestic consumption. The HSBC Markit PMI for India, Asia’s third-largest economy, rose to 57.2 in October from 55.1 in September.
Mirroring a report from Japan last Friday, South Korean manufacturing shrank for the second month in a row as the HSBC/Markit PMI fell to 46.75 in October — the lowest since February 2009 — from 48.8 in September.
An unexpected rise in Britain’s manufacturing index to 54.9 will increase doubts that the Bank of England will soon embark on more quantitative easing. It followed official data last week that showed the UK economy grew at a surprisingly strong rate of 0.8 percent in the third quarter from the second.
Equivalent surveys from Europe are due on Tuesday, but Britain’s PMI showed manufacturing growth picked up pace last month for the first time since March.
Flash October figures for Germany, released last month, also gave a strong reading although much of Europe remains mired in debt and poised to cut public spending to deal with it — a move that will crimp economic growth going forward.
It seems that the Chinese and Indian motors are being fuelled primarily by domestic consumption which continues to grow strongly. Perhaps this is not so surprising considering that the growth of the consuming “middle-class” in India and China is probably the fastest it has ever been. In India this growth is probably twice the growth of the total population (and there is some belief that population growth rates drop sharply for people as they enter the “consuming middle-class”).
Japanese manufacturing is being hampered by the strong Yen and Korean manufacturing is yet to pick up. In Europe, the weak Euro is driving German exports and UK manufacturing is showing very strong. The low Dollar value may be beginning to help US exports as well.
The k2p blog 