Statistics

Oct PMI hits 54.7% amid inflation concerns

(Xinhua)
Updated: 2010-11-01 10:41
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BEIJING - The Purchasing Managers Index (PMI) of China's manufacturing sector rose to 54.7 percent in October, suggesting increased inflationary pressures in the near term, the China Federation of Logistics and Purchasing (CFLP) said Monday.

The figure, 0.9 percentage points higher than September, was the index's third consecutive monthly increase and 20th straight month above 50 percent, the CFLP said in a statement on its website.

The PMI is a package of indices that measure the performance of the country's manufacturing sector. A reading above 50 percent indicates economic expansion while below 50 percent indicates contraction.

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According to the CFLP, six of the 11 sub-indices, including production, input prices and new orders, increased in October by a month-on-month basis. The input prices index rose the most, up 4.6 percentage points from a month earlier to 69.9 percent.

Zhang Liqun, a researcher at the State Council's Development Research Center, said the October PMI expansion indicates a further stabilization of economic growth while the surge in the input prices index suggests increased pressures on production costs.

"Close attention should be paid to the future development of the economy, which should not be treated with over-optimism," Zhang said.

The CFLP said its survey respondents had complained about price fluctuations in food and a sharp rise in cotton and rubber prices.

"China will face relatively high inflation pressure in the near future," said the CFLP statement.

The federation said the continued expansion of the PMI figure indicates expansion in the manufacturing industry and strong market demand.

In the fourth quarter, the macro-economy will maintain stable and relatively rapid growth with economic growth figures likely to drop due to last year's higher comparison base, the CFLP said.

China's gross domestic product (GDP) grew 9.6 percent in the third quarter year on year, a slowdown from 11.9 percent in the first quarter and 10.3 percent in the second quarter.

In September, the consumer price index (CPI), the main gauge of inflation, rose 3.6 percent year on year, a 23-month high. It was also the third consecutive month-on-month acceleration.