Data for October may provide further evidence of a mild economic recovery taking shape in China, analysts said ahead of date slated to be released on Friday. 

 

Investment in infrastructure, especially transportation, should help bolster the performance along with improved retail sales due to the eight-day National Day holiday at the beginning of last month.

 

"China's economy may have leveled out of the worst slump since the 2008 global financial crisis," said Yao Wei, China economist at Societe Generale. "Nearly all economic indicators will post better readings in October, and inflation will ease further to allow previous policy easing to filter through."

 

Yao said he expected fixed-asset investment will expand 20.6 percent on an annual basis in the January-October period, up from the 20.5 percent rise in the first nine months. Retail sales may have increased 14.5 percent last month, compared with 14.2 percent in September.

 

Lu Zhengwei, chief economist at Industrial Bank, was a bit less optimistic but also upbeat about the recovery.

 

"It is safe to say we have passed the worst time in this economic downturn," Lu said, forecasting fixed-asset investment will rise 20.3 percent in October and retail sales 13.7 percent.

 

In the past two months, the National Development and Reform Commission has approved several new projects including 25 subway lines and 24 airports. The new projects will require a combined 900 billion yuan (US$144 billion) in investment.

 

"Although the cooler weather may limit the construction of some projects, the performance of upstream companies can still be stimulated by the growing number of new orders," Lu said.

 

There have been some signs already.

 

The official Purchasing Managers' Index, which measures operating conditions at mainly state-owned industrial enterprises, returned to 50.2 in October, up from 49.8 in September and 49.2 in August. It was the first expansion in three months.

 

The non-manufacturing PMI, a gauge of service companies, reached 55.5 in October, up 1.8 points from a month earlier.

 

Tang Jianwei, an analyst at Bank of Communications, said inflation will remain low in October, which may allow further monetary policy easing. Tang projected consumer prices will advance 1.9 percent in October, the same as September. 

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