The acceleration in the HSBC China Flash PMI signals two things?the third quarter slowdown in the economy was just temporary and demand for commodities in the world?s largest consumer will remain strong.

The flash Purchasing Managers? Index rose to 51.1 in October from September?s final reading of 49.9, climbing above the 50-level that separates expansion from contraction for the first time since July. The details were also positive with new orders gaining and input prices declining, setting the stage for a stronger fourth quarter. Of course, one should always be cautious about saying one month?s data, and a preliminary reading at that, is enough to snap three months of declines, but in this case there is enough supporting evidence to suggest an economic soft landing is still the most likely outcome for China.

First off, the slowdown in economic growth in the third quarter to 9.1% year-on-year was misinterpreted by some commentators as a sign of a serious slowing in the Chinese economy, especially since it was slightly below the consensus forecast. It was a history lesson that the monetary tightening imposed over the prior year was working by moderating growth and taking the heat out of inflation, exactly as hoped for.

What was more important out of last week?s economic data was that industrial output accelerated in September to an annual rate of 13.8%, beating forecasts, while retail sales also beat the consensus, expanding 17.7% in September in year-on-year terms.When taken together with Monday?s flash PMI, the picture that emerges is one of an economy that underwent a much-needed dip.

Picture the Chinese economy as a race car hurtling around a track. When driving at high speed around a challenging circuit, drivers will sometimes touch the brakes while cornering to shift the weight of the car and re-balance it.

This is what has happened with China, and as with racing there are still obstacles needing to be faced, such as other cars on the circuit called Europe and the US, which may still crash or spill oil across the track or drive slowly enough to hold up the Chinese driver?s progress.

Speaking of oil, this appears to be an area of weakness in recent China commodity data, in contrast to robust imports of copper and iron ore and to a lesser extent coal. Implied demand rose a scant 1% to 8.9 million barrels a day in September, with imports rising only slightly to 4.98 million barrels a day from August?s 4.95 million.

This confounded expectations that imports would grow and was one of the few arguments the bears could cite in saying the Chinese economy was slowing.There are a few things to note on oil demand. Firstly, prices were still fairly high when September cargoes would have been booked, making it likely Chinese refiners bought only what they needed and weren?t rebuilding inventories.

Furthermore, the implied demand figure excludes movements in inventories and it?s possible that these were drawn down in September, especially given some refineries were still undergoing maintenance.

JPMorgan analysts said refinery maintenance in the third quarter of 2011 exceeded that of the same quarter last year by 3,00,000 barrels a day, certainly enough to weigh on implied demand.Still, crude imports will have to rise in the fourth quarter to sustain a bullish view of oil demand in China.

The author is a reuters market analyst. The views expressed are his own.