PMI edges down as market demand cools 
2019-11-01
CHINA’S manufacturing activity retreated in October, reversing last month’s rally, while the non-manufacturing PMI also fell.
The official Purchasing Managers’ Index, which measures vitality in the manufacturing sector, edged down 0.5 points to 49.3 in October from a month earlier, the lowest level since March, according to data released by the National Bureau of Statistics yesterday.
A reading above 50 indicates expansion, under 50 is considered contraction.
Zhao Qinghe, a senior statistician at the bureau, said while production expanded, market demand had cooled.
The sub-index for production tumbled 1.5 points to 50.8, though remaining in expansion territory, indicating manufacturing production continues to expand but at a slower pace.
Of the 21 industries surveyed, the production sub-indexes for 13 were in the expansion range. The textile and clothing sector, paper printing, chemical fiber, rubber and plastic products, special equipment and computer communication equipment industries were all above 55.
The new orders sub-index which reflects market demand also fell 0.9 points to 49.6 in October.
Meanwhile, the sub-indexes for new export orders and imports both rebounded 0.6 points from a month earlier each, to 46.9 and 47.4, respectively, though remaining in contraction.
The new export orders sub-index also fell in October, to 47.0 from 48.2 in the previous month, “weighed on by existing higher US tariffs on the US$380 billion worth of Chinese products, the slowdown in global manufacturing and continued tech downswing,” according to Lu Ting, chief China economist at Nomura. The raw materials inventory sub-index edged down to 47.4 last month from 47.6 in September.
The PMIs of both large and small Chinese firms fell to 49.9 and 47.9, respectively, in October compared with 50.8 and 48.8 the previous month. The PMI of medium-sized enterprises edged up marginally by 0.4.
“Not all segments are export-oriented firms, especially for smaller and medium enterprises, which we think are more domestically oriented rather than external,” said Xing Zhaopeng, China markets economist at ANZ Group. “The progress of the US-China trade talks is no longer a cyclical driver of the Chinese economy’s growth momentum, as the domestic economy dominates the outlook,” Xing said.
The bureau’s non-manufacturing PMI retreated 0.9 points from a month earlier to 52.8 in October, but still remained in expansion.
