China PMI Surges in Hopeful Sign for World Economy

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The National Bureau of Statistics of China released its manufacturing Purchasing Managers Index (PMI) for September. The number was a very healthy 52.4. Any number above 50 signals expansion. Since so much of China’s manufactured goods are exported, the news likely signals demand for China’s goods is robust in larger countries.

China’s factory activity remains a benchmark to measure demand for factory-based products around the world. It is also considered a good yardstick for China’s gross domestic product (GDP) growth.

Although not directly connected, U.S. GDP showed a 3.1% improvement in the second quarter. Europe’s economy continues a very robust recovery from the Great Recession, with its largest nation by GDP, Germany, posting particularly strong results. Even the long moribund Japanese economy has show signs of life.

The PMI number’s effect on the Chinese economy also means that its consumer population is healthy. This, in turn means import growth, which is a healthy contributor to economic activity among trade partners, first among them the United States.

Economists already have posted forecasts for U.S. GDP in the third and fourth quarters. Most are below the 3.1% expansion level. However, if data from other countries demonstrates improvement, and third-quarter earnings are strong, America’s economy could grow at or above 3%. China’s data, at least, shows this is becoming more likely.