China factory activity shrinks for second month amid high material prices, soft domestic demand
- The official manufacturing purchasing managers’ index (PMI) – a survey of sentiment among factory owners – fell to 49.2 in October, from 49.6 in September
- China’s official non-manufacturing PMI – which measures morale in the services and construction sectors – was down to 52.4 in October from 53.2 in September
China’s factory activity contracted more than expected in October to shrink for a second month, hurt by persistently high raw material prices and softer domestic demand, pointing to more economic disquiet in the final quarter of 2021.
The 50-point mark separates growth from contraction. Analysts had expected it to come in at 49.7.
China’s sprawling manufacturing sector has steadily slowed this year, with output in September growing at its most feeble pace since March 2020 due to environmental curbs, power rationing and higher raw material prices.
In line with the softer headline PMI, a subindex for production slipped to 48.4 in October from 49.5 in September. A subindex for new orders also contracted for a third month, coming in at 48.8.
“About one-third of the surveyed companies listed insufficient demand as their biggest difficulty, indicating inadequate demand had restricted their production,” said Zhang Liqun, an analyst at the China Logistics Information Center.