The preliminary purchasing managers index (PMI) for Chinese manufacturing issued by the Hong Kong and Shanghai Banking Corporation (HSBC) increased to 49.1 in October from the final September reading of 47.9, reaching a three-month high. However, a reading below 50 indicates a contraction and with the preliminary October reading, the index stayed below 50 for the twelfth consecutive month.
Meanwhile, the China's manufacturing output index for October, standing at 48.4 points, also hit a three-month high, while the index in September was 47.3 points. The improvement in new orders, which are now at their highest level in six months, boosted the index.
Hongbin Qu, an economist from the HSBC, said the reading shows the economy is responding to stimulus measures undertaken by policymakers, but cautioned that further easing may be necessary.
The index reinforces the broad expectation among economists that while pro-growth policies will remain in place. Meanwhile, the economists expect a steady recovery to be achieved at current settings.