The HSBC Chinese manufacturing sector purchasing managers´ index for the month of October rose to 49.5, from 47.9 in the month before, according to survey compiler Markit.

That signals that activity in the sector has now been deteriorating for a full year. However, it is now at an eight month high and just a hair´s breadth away from the level - of 50 points - which indicates that the contraction has ceased.

Furthermore, new orders actually increased. Although the increase was marginal it does mark the first rise in a year. Even so, and somewhat intriguingly, new export orders actually declined for a sixth successive month, with the rate of reduction again solid (but slower than in September). Weak demand from Europe and the US was reported. This indicates that the increase came from domestic clients.

Worth pointing out, the "official" purchasing managers' index, which is compiled by the China Federation of Logistics and Purchasing, climbed to 50.2 after 49.8 in the previous month. That was in-line with consensus expectations.

Commenting on the survey data, Hongbin Qu, Chief Economist, China & Co-Head of Asian Economic Research at HSBC said: "October's final PMI rose to an eight-month high, implying that China's industrial activity continues to bottom out following a modest pickup last month. This is mainly driven by the increase of new orders, thanks to the filtering through of the earlier easing measures, while exports outlook remains challenging. We expect a continuation of policy easing to further boost domestic demand and counterbalance the external weakness, leading to a gradual growth recovery in the coming quarters."

As an aside, just this week economists at Bank of America raised their forecast for Chinese economic growth in the last three months of the year to 7.8%, from its previous estimate of 7.5%.

AB

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