China factory activity lifted by strong demand, but power shortages and rising costs weigh on production

The Caixin/Markit manufacturing purchasing managers’ index (PMI) rose to 50.6 in October from 50.0 in September

The index focuses on small, private firms unlike the official index whose respondents come mostly from larger, state-owned firms

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China’s Caixin/Markit manufacturing purchasing managers’ index (PMI) rose to 50.6 in October from 50.0 in September. Photo: AFP

Published: 10:02am, 1 Nov 2021Updated: 5:38pm, 3 Nov 2021

China’s October factory activity grew at its fastest pace in four months as new orders rose and disruptive power shortages started to ease, but input costs remained high while export orders declined further, a private survey showed on Monday.

The Caixin/Markit manufacturing purchasing managers’ index (PMI) rose to 50.6 in October – its highest level since June.

Economists in a Reuters poll had expected the index to remain unchanged from September at 50.0. The 50-mark separates growth from contraction on a monthly basis.

The relative strength in the Caixin PMI contrasts with an official survey released on Sunday which showed China’s factory activity shrank for a second month.

We need exercise caution when interpreting both the official and Caixin PMI due to their imperfect performance

Lu Ting

Analysts attributed the divergence to the different samples and survey periods. But even the more bullish Caixin survey, which focuses on smaller firms in coastal regions, showed a subindex for output showed production shrank for the third consecutive month and at a faster rate than in September.