China’s manufacturing expanded at the fastest pace in 18 months in October, adding to signs that the nation can sustain its economic rebound.

The Purchasing Managers’ Index rose to a seasonally adjusted 55.2 from 54.3 in September, the Federation of Logistics and Purchasing said today in an e-mailed statement in Beijing. The latest number was higher than the median estimate of 54.7 in a Bloomberg News survey of 10 economists. A reading above 50 indicates an expansion.

A $586-billion stimulus plan and unprecedented growth in new loans have countered an 11-month slump in exports, helping China to bounce back from the worst global recession since the Great Depression. The current manufacturing figure compares with a record-low 38.8 in November last year, when recessions in the US, Europe and Japan sent export orders plunging.

“China’s recovery has been impressive, but has been heavily reliant on government-directed investment,” said Brian Jackson, Hong Kong-based strategist for emerging markets at Royal Bank of Canada. “To sustain strong growth through 2010, we will need to see a more broad-based recovery.”

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

The government forecast on October 27 that industrial production will grow at a faster pace in the fourth quarter as the recovery consolidates. Tsingtao Brewery Co., the nation’s second-biggest brewer by volume, is among manufacturers to have reported an increased third-quarter profit.

UBS AG forecasts that China’s economy will expand 8.4 percent this year and 9 percent in 2010 and Vice Premier Li Keqiang reiterated on Oct. 30 that the government’s 8 percent growth target is within reach this year.

“The economy of China has been enjoying better momentum with each passing quarter,” Li said at a lunch in Sydney, speaking through an interpreter.

The export slump cut economic growth to a 6.1 percent annual pace in the first quarter of this year, the slowest in almost a decade, according to government data. The stimulus plan, spanning roads, railways and the construction of low-cost homes, helped to drive expansions of 7.9 percent in the second quarter and 8.9 percent in the third.