HSBC China Composite PMI™ data (which covers both manufacturing and services) signalled an increased level of business activity in China for the sixth successive month in October. That said, the HSBC Composite Output Index posted at 51.7 (down from 52.3 in September), and indicated only a modest rate of expansion that was the slowest in three months.
Growth was supported by increases in business activity across both the manufacturing and service sectors in October. That said, manufacturing output expanded at a marginal pace that was the weakest in five months. Growth of service sector activity also slowed in October, but remained solid overall. This was highlighted by the HSBC China Services Business Activity Index posting at 52.9 in October, down from 53.5 in September.
Manufacturers and service providers both registered an increased amount of new work during October. However, the rate of new order growth at goods producers edged down to a five-month low. Meanwhile, growth of new work at service providers was little-changed from September and solid. The development of new projects and increased client demand was linked to the latest rise in new workloads.
October data continued to signal divergent employment trends, with workforce numbers declining for the twelfth successive month at manufacturers, but rising at service providers. Furthermore, it was the strongest expansion of service sector payroll numbers since March. At the composite level, employment was broadly unchanged from the previous month.
Backlogs of work at service providers declined for the fourth straight month in October. Meanwhile, outstanding business increased across the manufacturing sector, with the rate of accumulation edging up to a 12-month high. As a result, the level of work-in-hand rose for the first time in four months at the composite level, albeit only fractionally.
Average cost burdens faced by service sector companies rose again in October, with the rate of increase quickening to a solid pace. In contrast, manufacturers saw the steepest reduction in cost burdens for seven months. Consequently, input costs at the composite level declined moderately over the month. Selling prices declined across both the manufacturing and service sectors in October. Selling prices set by goods producers have now fallen for three months running, with the latest reduction the strongest since March. Meanwhile, service providers cut their tariffs for the first time in three months, albeit only fractionally.