China flash HSBC PMI edges up but factory output at 5-month low

China's vast factory sector grew a shade faster this month as companies drew more foreign and domestic orders, a survey showed yesterday, though the modest expansion is unlikely to dispel concerns about an economic slowdown.

The flash HSBC/Markit manufacturing purchasing managers' index (PMI) edged up to a three-month high of 50.4 from a final reading of 50.2 in September, and just a hair's breadth from the 50.3 reading that was forecast by analysts.

Underscoring the economic pressures, growth in new orders at home and abroad slowed in October and producer prices fell, pushing factory inflation to a seven-month low.

The level of output in factories dropped to a five-month low of 50.7, just above the 50-point level that separates growth from contraction on a monthly basis.

"While the manufacturing sector likely stabilised in October, the economy continues to show signs of insufficient effective demand," said Hongbin Qu, chief economist for China at HSBC.

"This warrants further policy easing and we expect more easing measures on both the monetary as well as fiscal fronts in the months ahead."

Asian stock markets reversed early losses after the survey results were released.