China’s manufacturing sector continued to contract in October but at the slowest pace in four months, survey results published by Caixin and Markit Economics showed Monday.
The manufacturing Purchasing Managers’ Index rose to 48.3 in October from 47.2 in September. Nonetheless, it was below the expected neutral level of 50.
Operating conditions worsened in each of the past eight months, though the latest deterioration was the weakest since June.
“The slight upswing shows the manufacturing industry’s overall weakening has slowed down, indicating that previous stimulating measures have begun to take effect,” He Fan, chief economist at Caixin Insight Group said.
Looking ahead, Julian Evans-Pritchard, an economist at Capital Economics expects a further recovery over the coming months as the recent acceleration in credit growth and fiscal spending continues to feed through into stronger economic activity.
Total new business decreased only moderately on the back of an increase in new export orders for the first time since June. Consequently, output and employment shrank at slower pace in October.
Meanwhile, purchasing activity and inventories of inputs continued to fall amid reports of lower production requirements.
Further, manufacturing employment declined in October, thereby extending the current sequence of job shedding to two years. That said, the rate of reduction was the weakest in three months.
Lower staffing levels as well as reduced output contributed to the sixth successive monthly increase in unfinished business.
Fewer sales led to an increase in stocks of finished goods for the third successive month, though the rate of accumulation weakened to a marginal pace, data showed.
Average cost burdens in China’s manufacturing sector dropped for the fifteenth straight month in October. Despite easing since September, the rate of deflation remained sharp.
Respondents linked lower input costs to reduced prices for wide range of raw materials. Companies passed on their savings in the form of lower selling prices.
The official manufacturing PMI, remained unchanged at 49.8 in October. Data released Sunday showed a third consecutive monthly contraction in manufacturing.
At the same time, the non-manufacturing PMI slid to 53.1 in October from 53.4 in September.
The material has been provided by InstaForex Company – www.instaforex.com