Nov. 2 (Bloomberg) -- China’s manufacturing expanded at the fastest pace in 18 months in October, a purchasing managers’ index released by HSBC Holdings Plc showed.

The index rose to a seasonally adjusted 55.4 from 55 in September, HSBC said in an e-mailed statement today. A reading above 50 indicates an expansion.

A government-backed purchasing managers’ index, released yesterday, also showed the quickest growth since April 2008 as an unprecedented $1.27 trillion of new loans this year powered a recovery. Stronger growth and rising consumer prices will likely prompt the central bank to tighten monetary policy from the second quarter of 2009, Goldman Sachs Group Inc. said Oct. 29.

“The ongoing strong recovery in the manufacturing sector should gain further momentum in the coming months,” said Qu Hongbin, chief China economist at HSBC in Hong Kong.

The world’s third-biggest economy may grow 9.5 percent this quarter from a year earlier, Zhang Liqun, an economist at the State Council Development and Research Center, said yesterday. That would be the third straight acceleration and the biggest gain since the second quarter of 2008.

Surging auto sales, driven by tax cuts and subsidies, are boosting manufacturing. Passenger-car purchases exceeded 1 million for the first time in September as General Motors Co., the largest overseas automaker in China, reported that sales doubled.

China’s cabinet pledged Oct. 21 to continue monetary and fiscal stimulus even after growth exceeded officials’ expectations for the first nine months of the year.

“We are fully aware that the economic recovery is not yet solid due to multiple uncertainties at home and abroad,” Li Dongrong, an assistant governor at the central bank, said in Kuwait yesterday. “China’s economy is at a critical juncture of stabilization and recovery.”

Commerce Minister Chen Deming warned Oct. 31 that the global economy may “plunge” if nations withdraw support measures too quickly.

The HSBC index, based on a survey of purchasing executives in more than 400 manufacturing companies, is released by HSBC and Markit Economics.

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Last Updated: November 1, 2009 21:30 EST