China’s economic recovery powers on as manufacturing, services sectors remain strong
- China’s official manufacturing purchasing managers’ index (PMI) stood at 51.4 in October, slightly below the reading of 51.5 for September
- The official non-manufacturing PMI, which measures sentiment in the services and construction sectors, stood at 56.2 in October, above the 55.9 reading for September
Chinese manufacturing and service sector sentiment remained strong in October, indicating that the country’s overall robust economic rebound from the damage caused by the coronavirus pandemic continued in the first month of the fourth quarter.
However, a sharp divergence in the level of activity between large and small manufacturing firms, and a continued drop in employment in the sector, underscored the uneven nature of the recovery and raised some questions about the pace of growth in coming months.
But the subindex for small manufacturing companies fell to 49.4 in October from 50.1 in September, indicating business activity among these firms contracted in the latest month, while the index for large industrial enterprises rose 0.1 point to 52.6, indicating continued strong expansion.
A PMI reading above 50 means that activity in the sector is expanding, a level below 50 that it is contracting. The further the reading is above or below 50, the faster the expansion or contraction.
The official non-manufacturing PMI, which measures sentiment in the services and construction sectors, stood at 56.2 in October. This was above the reading of 55.9 in September and also above the median expectation in a Bloomberg survey for a rise to 56.0.
Within non-manufacturing, service sector sentiment rose to 55.5 from 55.2, while morale within the construction sector eased back to 59. 8 from 60.2, but remained very strong as the nation’s infrastructure and property building booms continued.