You may recall that last month China’s purchasing managers index (PMI) was suggesting recession was drawing close for her vitally important manufacturing sector. What news would the August data bring?

Last month the PMI for manufacturing produced by Markit, fell to 49.4 – suggesting the sector contracted in July. The official PMI stayed above 50 in July, but only just. The good news for August was that both indices were up. The Markit index rose to 51, so that was quite a hike for one month.

The two indices are still low by historical standards, and clearly China needs to look elsewhere if it is to maintain stellar growth in GDP. But at least the forward indicators for manufacturing have lifted.

Meanwhile, the yuan has risen sharply against the dollar. So that will help to pacify US senators. It is of course a complete coincidence that the rise coincided with Larry Summers, who is the head of Barack Obama’s National Economic Council, paying a visit to Beijing.

It’s funny that. The yuan always seems to rise just before these politically sensitive moments – as it did just before the last G20 summit.

Meanwhile, India closes in on China’s position as the world’s fastest growing large economy. GDP in the 12 months to the first quarter of India’s new financial year was 8.8 per cent. India is now breathing right down China’s neck.

India’s growth is to a large extent coming from internal demand. This is not always a good thing, but right now, while the world is still grappling with global imbalances, India’s economic growth may well prove to be more sustainable than China’s.

So that’s China. How is Europe faring? Last week saw the latest GDP figures. Europe’s recovery continues

Uncle Sam enjoys some relief.
China sees manufacturing pull up from recession level as India booms
Europe’s recovery continues
UK stutters