The Purchasing Managers Index released by the China Federation of Logistics and Purchasing showed strength in new factory orders as the overall index topped 50 for the 20th consecutive month. Above 50 indicates growth in manufacturing while below 50 indicates contraction.
The data showed continued growth in the PMI input price index, which has gained 31 points since July pushed by rising prices in commodities, Markit reported. The surge in producer prices combined with rising consumer prices may prompt the People's Bank of China to raise lending rates for the second time this year to slow the overheating economy.
"Another upbeat reading for the HSBC China Manufacturing PMI suggests the strong growth momentum in domestic demand to warrant around 9 percent (economic growth) in the fourth quarter, despite the still-soft increase in new export orders," said HSBC Chief Economist Hongbin Qu, MarketWatch reported.