Chinese manufacturers again signalled only a fractional improvement in overall operating conditions in October. Output and new business both expanded at the slowest rates in five months, while new export order growth weakened from September’s recent peak to a modest pace. Relatively subdued market conditions led to a further reduction of staff numbers in October, while backlogs of work rose modestly. Meanwhile, average input costs and prices charged both declined at the
fastest rates since March.
After adjusting for seasonal factors, the HSBC Purchasing Managers’ Index™ (PMI™) posted at 50.4 in October, unchanged from the earlier flash reading. This was up slightly from 50.2 in September to a three-month high, but nonetheless continued to signal only a fractional improvement in the health of the sector.
Manufacturing output in China continued to increase in October, albeit at the weakest rate in the current five month sequence of growth. Where higher output was
noted, this was generally attributed to increased new order volumes. That said, the latter also expanded at the slowest rate in five months. Growth of new business
from abroad meanwhile slowed from September’s four-and- a-half year high to a moderate pace. Higher new export business was generally attributed by panellists to stronger client demand across a number of key export markets, though other firms cited relatively subdued market conditions.
Staffing levels were cut for the twelfth successive month in October, albeit at the slowest rate since July. Meanwhile, the level of work-in-hand rose at a moderate pace, with a number of panellists attributing the increase to sustained new order growth.
Purchasing activity increased across China’s manufacturing sector in October, as has been the case since May. That said, the rate of growth eased to a marginal pace that was the weakest in five months.
Stocks of inputs were meanwhile depleted for the third month in a row, amid reports of ongoing inventory adjustments. In contrast, stocks of finished goods rose for the first time in six months, albeit fractionally. Average cost burdens declined at the quickest rate since March in October, amid reports of lower prices for raw materials. Prices charged by manufacturing companies also declined markedly in October, which was partly attributed to attempts to gain new business.
The official version:
China’s official Manufacturing Purchasing Managers’ Index dropped to 50.8 in October from 51.1 in September, according to the China Federation of Logistics and Purchasing, which issues the data with the National Bureau of Statistics.
The latest manufacturing data showed almost across-the-board weakness and pointed to further problems ahead. The new orders subindex slipped to 51.6 in October from 52.2 in September, while the new export orders subindex dropped to 49.9 from 50.2. The subindex measuring production fell to 53.1 from 53.6, while employment was slightly improved, though still in contraction territory, at 48.4 against 48.2.
Zhao Qinghe of the National Bureau of Statistics said smaller companies were still facing difficulties amid the slower expansion and that “looking ahead there is a need for stepped up targeted measures.”