-Jonathan Garner, emerging market equity strategist at Morgan Stanley
Business activity in the Chinese manufacturing sector picked up to the highest level in three months in October, easing concerns over the pace of the nation's economic growth. The flash HSBC Manufacturing PMI gained to 50.4, up from the final September reading of 50.2. The Australian Dollar, China-dependent currency, was little changed versus the Greenback following the data release. Despite a modest increase in the gauge, a breakdown of the data showed output declined to 50.7, the lowest level in five months, new orders also slowed. The key employment component also fell for a 11th straight month, fuelling speculation of further stimulus from policymakers. Chinese authorities have repeatedly stressed their willingness to tolerate slowed growth as long as the labour market remains resilient. Economic growth in the third quarter fell to 7.3% year-on-year, down from 7.5% in the second quarter. While the data is positive by most standards, it marks China's poorest economic performance since 2009.
Concerns over China's growth have been building since the beginning of the year on a slump in housing prices and worries about out-of-control lending. The export sector, a key growth engine of China's economy, has also been undermined as the rest of the world struggles with its own economic problems.
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