GLOBAL ECONOMY-Global manufacturing shows signs of strength

* Strong Chinese, U.S. manufacturing data lifts stocks
* Indian PMI survey also robust
* UK industry growth increases pace for 1st time since March
(Adds NEW YORK dateline, byline and U.S. ISM survey)

By David Milliken and Edward Krudy

LONDON/NEW YORK, Nov 1 (BestGrowthStock) – 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.

Two surveys of Chinese executives showed broad-based
strength in the manufacturing sector, helping to lift natural
resource stocks and commodity prices as investors anticipated
strong demand from the world’s second-largest economy.

In the United States, where the Federal Reserve is widely
expected to announce this week that it will counter a sluggish
economy by buying long-dated Treasury debt, the manufacturing
sector unexpectedly grew at its fastest pace since May,
according to the Institute for Supply Management.

“It is clear that stronger growth overseas and the
weakening of the U.S. dollar has provided a significant boost
to U.S. manufacturers,” said Zach Pandl, an economist at Nomura
Securities International in New York.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Global manufacturing PMI graphic: ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>


The Institute for Supply Management said its index of
national factory activity rose to 56.9 in October from 54.4 in
September. That was the highest since May and well above the
54.0 median forecast of 77 economists surveyed by Reuters.

A figure above 50 denotes expansion; a reading below 50
indicates contraction.

The survey showed that U.S. manufacturing generated many
new orders from exports, with strong growth in autos and
computers. The employment index also rose sharply.

Despite the surprisingly strong data, investors are in
little doubt that the Fed is poised to inject more money into a
struggling U.S. economy. The Fed will hold a policy meeting on
Tuesday and Wednesday, with a statement expected after the
meeting’s conclusion on Wednesday afternoon.

The United States reported on Friday that its economy grew
at a tepid annualized rate of 2.0 percent in the third quarter.

U.S. stocks (Read more about the stock market today. ) rallied more than 1 percent after the ISM data
but gave up some gains toward midday. U.S. investors are also
focusing on midterm elections on Tuesday as well as the Fed’s
announcement the following day.

In early afternoon trading, the major U.S. stock indexes
were up 0.1 percent to up 0.5 percent. The FTSEurofirst 300
index of pan-European shares (.FTEU3: ) edged up 0.09 percent.
MSCI’s broadest index of Asia-Pacific shares outside Japan
(.MIAPJ0000PUS: ) was up 1.9 percent.


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

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. [ID:nBMA008748]

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.
(Reporting by David Milliken in London and Edward Krudy in New
York; Additional reporting by Rodrigo Campos in New York;
Editing by Jan Paschal)

GLOBAL ECONOMY-Global manufacturing shows signs of strength