By Lucy Hornby and Se Young Lee
BEIJING/SEOUL Nov 1 Big Asian economies are
slowly picking up after a year spent battling against global
headwinds, according to business surveys and data released on
Thursday that showed renewed vim from China's factory sector and
a rebound in South Korean exports.
A U.S. factory survey later - closely watched in Asia as a
pointer towards export and production trends - is likely to show
more evidence of a sluggish recovery with a second straight
month of expansion in manufacturing.
The downturn in Britain's manufacturing sector worsened in
October as companies received fewer orders and costs rose at a
faster pace, reviving worries about the country's fragile
India, hammered as much by internal politics as the global
downturn, also showed signs of a modest revival in manufacturing
in a survey released on Thursday.
Data over the past month has shown the health of the global
economy remains fragile, with retail sales and the housing
market pointing to an improvement in the United States while
debt-hobbled Europe remains mired in crisis.
"Overall sentiment is brightening and Chinese orders are
suggesting a moderate recovery," said Hirokazu Yuihama, a senior
strategist at Daiwa Securities in Tokyo.
The Chinese economy, the motor of global growth in recent
years, appears to have gathered pace in October after slowing to
its weakest pace in more than three years in the third quarter.
China's official manufacturing purchasing managers' index
(PMI) rose to 50.2 from 49.8 in September, just below a 50.3
forecast by a Reuters poll last week and suggesting an
acceleration of output that will help lift fourth-quarter GDP
growth above the 7.4 percent annual rate recorded in the third
The U.S. Institute of Supply Management PMI, due at 1400
GMT, is forecast to come in at 51.2, slightly behind September's
51.5 but still above the 50-point line that divides accelerating
from slowing activity.
Reports covering the major euro zone countries are due for
release on Friday and expected to show a continued contraction.
Beijing has been following a programme of pro-growth fine
tuning of economic policies for a year and analysts broadly
expect that to remain in place when a new leadership line-up at
the top of the ruling Communist Party is unveiled this month.
"The return of the PMI above 50 suggests economic momentum
has indeed picked up. It indicates the effect of policy easing
may have been stronger than the consensus expected," Zhiwei
Zhang of Nomura said in a comment emailed to Reuters.
"We believe macro data will continue to surprise on the
upside in coming months, as the government continues to ease
policy through the period of leadership transition."
Also on Thursday, the final reading of the Chinese HSBC PMI
rose to 49.5 in October from 47.9 in September. The reading was
the highest since February and deviated more than usual from the
October flash, or preliminary, reading of 49.1 released last
The official PMI generally paints a rosier picture of the
factory sector than the HSBC PMI as the official survey focuses
on big, state-owned firms, while the HSBC survey targets
smaller, private firms that have limited access to bank loans.
South Korea, another of Asia's manufacturing powerhouses,
posted the first annual rise in exports in four months in
October, adding to hopes for a turnaround after a year-long
slump in global trade.
Stronger demand from China and Europe led the small but
meaningful 1.2 percent gain in exports last month on an annual
basis, data from the Ministry of Knowledge Economy showed.
South Korea is home to some of the world's top suppliers of
cars, ships and consumer electronics, and its October trade
figures, the first from a major exporting economy, suggested
global demand may be on the mend after a months-long slowdown.
A deputy economy minister said the recovering trend would
continue for the remainder of the year, but analysts, while
agreeing that the worst was over, said it would take a while
longer before the global economy stages a firm rebound.
"The third quarter was the bottom for sure, but this
'bottom' will likely stretch out," said Park Hyung-jung, an
economist at Meritz Securities in Seoul.
There was less encouragement from South Korea's Markit/HSBC
PMI, which showed the country's manufacturing sector shrank in
October for a fifth consecutive month, although at a slower pace
than in September, as new export orders failed to break a
Trade-dependent Taiwan also saw a continued manufacturing
contraction, although the headline October reading from its HSBC
PMI was the highest in four months as a decline in new export
Monetary easing by the big developed world central banks has
helped push up the currencies of countries such as Korea and
Taiwan, hampering their export-led recoveries.
India's manufacturing growth inched up in October from
September's 10-month low, supported by a pick up in new orders
and an easing of price pressures.
The HSBC manufacturing PMI, which gauges the business
activity of India's factories but not its utilities, nudged up
to 52.9 in October from 52.8 in September.
While faltering demand from the West has hit Indian exports,
the heaviest drag on an economy struggling against its weakest
GDP growth in nearly three years has come from the government's
struggle to rein in spending and a lack of reforms needed to
"Economic activity in the manufacturing sector picked up
slightly thanks to firm new orders," said Leif Eskesen, an
economist at HSBC, sponsor of the survey. "Looking ahead, the
recovery in manufacturing growth is likely to be slow."