China: Does rise in manufacturing indicate rebound?

Increases in production and orders for China's factories imply that momentum is building for the country's economy overall, leaders reported Thursday.

A steel worker operates a furnace at a steel manufacturing plant in Hefei, Anhui province in this file photo. Economists reported improvements in China's manufacturing sector, suggesting the economy as a whole is gaining.

Chinese manufacturing rose to a seven-month high in October, suggesting continued momentum for the rebound in the world's second-biggest economy.

The report released Thursday follows Chinese data earlier this month that showed quarterly economic growth rose to 7.8 percent after hitting a two-decade low in the second quarter, easing pressure for further stimulus and allowing leaders to focus on reforms.

The preliminary version of HSBC's purchasing managers index rose to 50.9 from September's 50.2 on a 100-point scale on which numbers below 50 indicate contraction.

The report, released before a similar official survey, provides an early indication each month of the health in China's mammoth manufacturing sector.

Output, new orders and new export orders all increased at a faster rate, according to the survey, which is based on 85-90 percent of responses from 420 factories.

HSBC's chief China economist Qu Hongbin said the reading improved thanks to "broad-based modest improvements," which imply that the recovery is consolidating.

"This momentum is likely to continue in the coming months, creating favorable conditions for speeding up structural reforms," Qu said.

China's communist leaders are scheduled to meet in November to draw up a blueprint for economic development.

The country's leaders have said their priority is longer-term reforms aimed at guiding the economy to slower, more sustainable growth based on domestic consumption rather than exports and investment. Reform advocates hope the blueprint will include measures to open up its markets and provide more financial support to private entrepreneurs.

The full version of HSBC's survey will be released Nov. 1.

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