Factory PMI rises sharply, new orders climb

The HSBC Markit PMI, based on a survey of 500 companies, rose to 57.2 in October from 55.1 in September and 57.2 in August.

October marked the 19th consecutive month that the index has been above 50, a level that divides growth from contraction.

“The manufacturing sector remains supported by strong local consumption growth, and growing employment suggests that domestic demand will remain robust," Frederic Neumann, co-head of Asian Economics Research at HSBC, said in a statement.

For the first time since May this year, the PMI data signalled a marginal rise in manufacturing employment.

But price pressures remained. The report said input prices for manufacturers increased substantially in October and at their fastest pace in five months, while output prices rose modestly.

“Price pressures, however, are still too strong for comfort, possibly prompting the central bank to hike again before the end of the year," Neumann said.

Central bank is expected to raise rates for the sixth time this year on Tuesday to try to control stubbornly high inflation in Asia’s third-biggest economy, a Reuters poll showed.

The wholesale price index, the most closely watched measure of inflation, rose by 8.62 percent in September from a year earlier, well above the central bank’s comfort zone of 5-6%.

Growth of manufacturing output was the strongest in seven months in October, regaining momentum lost in the previous month.

New orders climbed for the 19th month in a row and at a faster rate than in September. However, the pace was still lower than in the first eight months of 2010.

Industrial output data on 12 October showed annual growth slumped in August to just 5.6% from 15.2% in July.

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