Published: Fri, November 02, 2018
Economy | By

China's manufacturing activity remains stable in October

China's manufacturing activity remains stable in October

In view of the sizes of enterprises, the PMI of large-sized enterprises was 51.6 percent, decreased 0.5 percentage point from last month, and continued to maintain its expansion generally; that of medium-sized enterprises and small-sized enterprises were 47.7 percent, 49.8 percent, which decreased 1.0 percentage point and 0.6 percentage point respectively from last month, lower than the threshold.
New export orders contracted for the fifth straight month. A reading above 50 on the index denotes expansion, while a reading below that reflects contraction.

China's Purchasing Managers' Index (PMI), which measures manufacturing growth, stood at 50.2 percent in October, the lowest since July 2016 and slightly down from 50.8 percent in September, the National Bureau of Statistics (NBS) announced on Wednesday.

Raymond Yeung, chief economist for China at ANZ, said: "All the numbers from China's PMI release today confirm a broad-based decline in economic activity", said adding that conditions for the private sector was "much worse" than headline data suggested.

While China's exports have been pretty resilient largely as firms front-loaded shipments to dodge stiffer United States duties, analysts see pressure building in coming months. "Besides an expected reserve requirement ratio (RRR) cut next January, we expect future supportive policy actions to be measured".

Some of that is due to exporters rushing to fill orders ahead of duty increases, but producers of higher-value-added goods such as factory and medical equipment have expressed confidence they can keep their USA market share even with higher prices.

The China Satellite Manufacturing Index, which the USA -based firm SpaceKnow Inc. compiles using satellite imagery to track activity levels across thousands of industrial sites, slipped below 50 in October for the first time since June 2017. Washington and Beijing slapped additional tariffs on each other's goods on September 24.

October has seen fluctuating supply and demand across the manufacturing sector due to external uncertainties and the National Day holiday in early October, NBS senior statistician Zhao Qinghe said in a statement (link in Chinese), analyzing the reasons for the PMI drop.

Manufacturers have come under pressure from the escalating trade war between the USA and China.

Japan's factory output also declined last month after a series of natural disasters, but the weakness clouds forecasts for third-quarter economic growth.

On the fiscal side the government is stepping up stimulus through infrastructure projects, and has also pledged more tax cuts next year to support growth.

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