Manufacturing growth slows in October - PMI

Manufacturing growth slows in October - PMI

New export orders placed with Chinese manufacturers contracted for the seventh consecutive month in October amid an escalating trade war with the US, the survey showed.

It was a touch above the 50-point mark that separates growth from contraction for a 27th straight month, but undershot the 50.6 forecast in a Reuters poll.

Private sector firms in all sectors account for 60 per cent of Chinese economic activity and 80 per cent of employment.

Chinese manufacturing sector growth was little changed at a very low level in October amid pressures from the U.S. trade war, data from financial news outlet Caixin showed.

"China's economy has not seen any obvious improvement", said Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group, in a note accompanying the survey.

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Manufacturing supply and demand fluctuated in October because of the National Day holiday and a complex, changeable external environment, and so manufacturing PMI fell from a month ago, but is still growing.

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Washington and Beijing slapped additional tariffs on each other's goods on Sept 24, and United States President Donald Trump has threatened to hit China with more duties.

China's economy grew at its weakest pace since the global financial crisis in the third quarter, as manufacturing output and infrastructure investment slowed. Analysts say business conditions will get worse before getting better. The upturn in total new work reached a five-month high, though only a fractional rise in new export orders was registered. Price pressures remained intense, however, with rates of input price and output charge inflation accelerating. That could put a further squeeze on profit margins, and risks setting off a vicious circle of lower business investment, job losses and deepening gloom for the broader economy.

Besides facing pressure from the escalating trade war with the US, the Chinese manufacturers have also been squeezed by the lack of credit streams as Beijing's crackdown on risky lending practices, and on corporate debts continue. Earlier this month China's central bank announced the fourth reserve requirement ratio (RRR) cut for this year, and is expected to ease monetary policy further.

The fall in new orders resulted in a sharp deceleration in the growth rate of manufacturing production. "China trade war", the report said.

"I suspect this growth rate is sending a false signal", said Fiore.

It was also released on a morning when the Pound has been boosted by reports that officials are close to agreeing terms of the U.K.'s withdrawal from the European Union, and that negotiators have reached an agreement that will prevent the City of London from being shut out of European Union markets after Brexit.

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