China’s manufacturers ‘not in high spirits in October’ as factory activity contracts

Caixin/S&P Global manufacturing purchasing managers’ index (PMI) fell to 49.5 in October from 50.6 in September

Gauge added to downbeat reading from China’s official manufacturing PMI, which fell to 49.5 in October from 50.2 in September

2-MIN READ2-MIN

Caixin/S&P Global manufacturing purchasing managers’ index (PMI) fell to 49.5 in October from 50.6 in September. Photo: Reuters

Published: 9:58am, 1 Nov 2023Updated: 11:31am, 1 Nov 2023

China’s factory activity unexpectedly contracted in October, a private survey showed on Wednesday, raising questions over the state of the country’s fragile economic recovery at the start of the fourth quarter.

Adding to a downbeat official manufacturing purchasing managers’ index (PMI) on Tuesday, the survey suggested the manufacturing sector is still not on solid footing despite China’s better-than-expected third-quarter gross domestic product growth.

The Caixin/S&P Global manufacturing PMI fell to 49.5 in October from 50.6 in September, marking the first contraction since July and missing analysts’ forecasts of 50.8 by a large margin.

The 50 index point mark separates growth from contraction.

“The Caixin manufacturing PMI declined under 50 in October, mirroring the change in the official manufacturing index. Taken together, the average of the two is consistent with a renewed deterioration in factory activity last month,” said Julian Evans-Pritchard and Sheana Yue, China economists at Capital Economics.

The data signalled a renewed deterioration in manufacturing conditions as factories reported a fresh fall in production amid slower growth in overall sales dampened by weak foreign demand, according to the Caixin survey.

New export orders for Chinese manufactured goods have shrunk for four consecutive months amid a relatively sluggish global economic climate.