China’s manufacturing sector slumps anew in October
For the coming year, Chinese manufacturers are most worried about the sluggish global economy.
The overall health of China’s manufacturing sector contracted once again in October, snapping a short-lived recovery in the face of weakening demand overseas, a recent industry survey showed.
The Caixin/S&P China general manufacturing purchasing managers’ index (PMI) went down to 49.5 last month from 50.6 in September, indicating a renewed deterioration in the sector’s operating conditions for the first time since July.
“Overall, manufacturers were not in high spirits in October,” said Wang Zhe, senior economist at Caixin Insight Group. “The economy has showed signs of bottoming out, but the foundation of recovery is not solid. Demand is weak, many internal and external uncertainties remain, and expectations are still relatively weak.”
Dragging the headline figure was a fresh decline in production as Chinese manufacturers chose to cut operations due to poor sales, particularly from overseas customers.
While new businesses continued to grow last month, the rate of expansion has slowed down as overall sales were hampered by declining new export orders. Factories also cut their purchasing activity last month for the first time since July, resulting in reduced inventories.
Inflationary pressures remain a major headache for companies with the average input prices rising at its fastest pace since January, prompting some manufacturers to raise their selling prices.
The survey also showed firms cutting their staff levels for the second month running in October in an effort to cut costs amid weak customer demand.
Deteriorating market conditions hampered business confidence as well. Business optimism among Chinese manufacturers slumped to its lowest since September of last year, and companies were most worried about the global economic conditions in the next 12 months.