* Chinese factories lead Asian upturn
* Global demand boosts Britain too
* Slight slowdown in U.S. factory growth expected
By Natalie Thomas and Andy Bruce
BEIJING, Nov 1 Demand for exports drove the
fastest upturn in Asia's factories in months during October, led
by China, as Friday's business surveys also showed UK
manufacturers still expanding.
The latest batch of purchasing managers indexes (PMIs),
which survey thousands of manufacturers worldwide, showed
Chinese factory growth hitting an 18-month high, and British
factories sustaining a solid rate of expansion.
Although data from the U.S. due later on Friday are expected
to show a slight slowdown in industrial growth, taken together,
the PMIs point to a gradual improvement in global economic
They follow a month in which a political standoff in
Washington over the U.S. debt ceiling and the sixth straight cut
in IMF global economic forecasts had raised fresh concerns about
the health of the global economy.
"Overall, the data is positive for global demand," said
Radhika Rao, an economist with DBS in Singapore. "There are
reasons to be optimistic, but cautiously optimistic," she said.
The raft of Asian PMIs showed why.
Taiwan's PMI reached its highest level since March 2012,
Indonesia's index hit a four-month high and Japan's PMI rose to
its strongest level in well over three years.
The major Asian economies of China, Japan, South Korea and
India reported new export orders expanding simultaneously for
the first time since May, which economists attributed partly to
the gradual improvement in Europe.
Most major European PMIs, including that for the euro zone,
come next week because of a holiday. But Britain, which has been
at the forefront of Europe's tentative economic recovery, saw
Data company Markit said its October UK manufacturing PMI
edged slightly lower to 56.0 from a downwardly revised 56.3 in
September. But anything over 50 means expansion and the latest
number remains within striking distance of August's two-year
peak of 57.1.
"With the domestic economy recovering strongly, all
important export markets either growing or at least improving
and a broadly stable exchange rate, output in this key sector
looks set to contribute its share to the recovery," said
Christian Schulz, senior economist at Berenberg.
China's official PMI rose to 51.4 in October from 51.1 in
September, topping expectations for a reading of 51.2.
A similar report from HSBC/Markit increased to 50.9, a
seven-month high. It showed a tick up in the pace of new
domestic and export orders, as well as the first increase in
employment in seven months.
"The PMI data for October shows a continued increase,
indicating a preliminary stabilisation in the economy," Zhang
Liqun, an economist at the cabinet think-tank Development
Research Center, said in a statement released with the official
China's reassuring PMI reading limited losses in Asian
stocks, which were under pressure after strong U.S. data added
to uncertainty over when the U.S. Federal Reserve might begin to
ease back on its stimulus.
India was the exception among a group of generally upbeat
PMI reports in Asia. Its HSBC/Markit PMI was unchanged at 49.6
in October, indicating the sector was contracting for a third
month, despite rising export orders.
The HSBC/Markit PMI for South Korea showed factory activity
expanded for the first time in five months in October and a
separate report said the value of exports in the month beat
expectations to hit a record high of $50.5 billion.
Factory activity in major exporter Taiwan, key to many
global tech supply chains, was running at its fastest pace since
March 2012, while Japan reported on Thursday that factory
activity grew at the fastest pace in more than three years.