China's Oct Caixin PMI steadies at 51, meets expectations

China Caixin Manufacturing PMI for October steadied at 51 vs. 51 expected, with Caixin's summary noting that the output increased at the slowest pace in four months.

Summary:

October survey data signaled a further marginal improvement in manufacturing operating conditions across China. While new orders rose at a slightly quicker pace, production increased at the softest rate for four months. At the same time, companies continued to shed staff amid reports of company-downsizing policies and efforts to raise efficiency. This, in turn, contributed to a further increase in outstanding business, which rose solidly. Strict environmental policies meanwhile contributed to a sharp rise in input costs and weighed on vendor performance. As a result, companies raised their factory gate prices at a solid pace.

The seasonally adjusted Purchasing Managers’ Index™ (PMI™) – a composite indicator designed to provide a single-figure snapshot of operating conditions in the manufacturing economy – was unchanged from September’s reading of 51.0 in October to signal a further marginal improvement in the health of the sector. Operating conditions have now strengthened in each of the past five months

Commenting on the China General Manufacturing PMI™ data, Dr. Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group said: “The Caixin China General Manufacturing PMI was 51.0 in October, unchanged from September and remaining in expansionary territory. The sub-index for output fell for the third straight month in October and was weaker than the average seen over the first 10 months of the year, even though growth in new orders picked up. The sub-indices for input costs and output prices both moderated from the previous month but remained at rather high levels. Stocks of finished goods and stocks of purchases lingered in contraction territory, although their paces of decline eased moderately from September. China’s manufacturing sector expanded steadily in October. But the stringent production curbs imposed by the government to reduce pollution and relatively low inventory levels have added to cost pressures on companies in midstream and downstream industries, which could have a negative impact on production in the coming months.”