Posted on 02 Nov 2023
After expanding for just one month, China's Purchasing Managers' Index (PMI) for the manufacturing industry has fallen below the threshold of 50 connoting contraction in October, with the reading dropping 0.7 index point on month to 49.5, according to the latest release from the country's National Bureau of Statistics (NBS) on October 31.
Previously, China's manufacturing industry had improved steadily month over month during June-September, seeing its PMI move up into the expansion territory in the prior month after staying below 50 for five consecutive months, Mysteel Global noted.
Nevertheless, "our country's economic prosperity level has experienced a downturn in October, indicating that further efforts should be put in to maintain a continuous recovery in the economy," Zhao Qinghe, the bureau's senior statistician, highlighted.
The retreat in manufacturing PMI in October was mainly impacted by factors including temporarily closed businesses during the country's Mid-Autumn Festival and National Day holidays that ended on October 6, Zhao explained.
Specifically, the sub-index for production among Chinese manufacturers slid by 1.8 points on month to 50.9 in October, though it was still hovering in the expansion zone. Zhao attributed the dip in this sub-index to the relatively high base in September and fewer working days this month.
In particular, the country's ferrous smelting and fabrication sector saw its production sub-index drop below 50 as manufacturing firms in the sector slowed their production activity.
The demand side of manufacturing industry softened as well, as the sub-index for new orders reversed down a four-month rise by dipping 1 point on month to 49.5 in October. Also, over 60% of the surveyed firms in the ferrous smelting and fabrication sector have met with insufficient demand this month.
Meanwhile, both medium- and small-sized manufacturing enterprises recorded weaker performance in October, with the PMI of the former down by 0.9 point on month to 48.7, and that of the latter being 0.1 point lower on month at 47.9. However, the PMI of large-sized firms remained in expansion zone at 50.7, the NBS data showed.
Despite that, Chinese manufacturers were still firmly confident about market development in the near term, with the sentiment index hovering at a high level of 55.6 in October, up by a tiny 0.1 point from the prior month.
On the other hand, China's PMI for the non-manufacturing sector scored 50.6 in October, remaining in expansion for the 10th straight month, though down by 1.1 points on month, according to the NBS data.
China's sub-index for business activities in the domestic construction sector stayed high at 53.5, and that for business activities in the civil engineering construction sector at 57.2 marked the third month of the reading above 57, reflecting accelerated construction works at infrastructure projects, Zhao pointed out.
Source:Mysteel Global
