In October, China’s factory activity showed signs of recovery among smaller manufacturers, according to a recent private survey. The Caixin/S&P Global Manufacturing Purchasing Managers’ Index (PMI) rose to 50.3, surpassing the Reuters poll estimate of 49.7. This marks an improvement from 49.3 in September and indicates expansion, as any PMI above 50 reflects growth. The Caixin index, which focuses more on exporters and private sector firms, contrasts with the official PMI that covers larger, state-owned enterprises.
Wang Zhe, a senior economist at Caixin Insight Group, noted that both supply and demand saw growth, with market demand rebounding and production increasing steadily. New orders grew at their fastest pace in four months due to stronger underlying demand and business development. However, export orders continued to decrease, albeit at a slower rate, and employment levels fell as manufacturers remained cautious about workforce numbers.
The positive PMI reading is seen as encouraging for the market, signaling that the Chinese government’s stimulus efforts are having an impact. In September, the People’s Bank of China reduced the reserve requirement ratio and lowered the seven-day reverse repurchase rate. This move aims to boost economic growth in the face of low consumption and a struggling property market.
Despite the uptick in factory activity, uncertainties linger regarding the sustainability of this trend. Intense domestic competition, a below-average industrial utilization rate, and potential external influences, such as the U.S. elections and rising global protectionism, pose challenges. Economists emphasize the importance of price recovery for the manufacturing sector’s sustained growth.
China’s parliament standing committee is set to convene next week, with potential announcements on fiscal stimulus expected after their meeting concludes on November 8.
Original Story https://www.cnbc.com/2024/11/01/chinas-caixin-manufacturing-pmi-for-october.html
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