China’s Official Manufacturing PMI Falls to 49.3 in October as Demand Contracts
Key Facts
China’s official manufacturing purchasing managers’ index fell to 49.3% in October, down 0.8 percentage points from September, signaling a contraction in activity from the previous month. The National Bureau of Statistics of China said a reading below the 50% threshold reflects declining activity. The survey showed simultaneous slowdowns in production and new orders, two key components in assessing factory performance. The official reading comes as companies face weak domestic demand and signs of softness in exports, according to reports citing analysts. By contrast, the private survey showed manufacturing activity remained in expansion territory during the same month, highlighting the divergence between the official and private gauges.
The official index stood at 50.1 points in September and 49.8 points in August before falling to 49.3 in October, according to the Associated Press. Among the survey’s components, the new orders index came in at 49.4%, down 1.1 percentage points from the previous month. The production index registered 49.8%, a decline of 1.9 percentage points. The National Bureau of Statistics said the production reading fell from the previous month, as did new orders. The readings reflect weakness in both demand and production across the industrial sector in October.
The new export orders index registered 48.7 points in October, compared with 50.0 points in September, according to the Associated Press. This coincided with Chinese companies shipping more goods overseas in search of buyers amid weak domestic demand linked to the property sector’s yearslong slump, the agency said. The chief statistician at the National Bureau of Statistics said some orders had been placed early ahead of the National Day holiday, alongside the impact of changes in the complex and volatile international environment. He added that both supply and demand had slowed. These factors provide context for October’s decline, while the private manufacturing survey remained at 52.0 points, compared with 52.1 points in September.
The sub-indexes showed mixed trends across activity components: the raw materials inventory index came in at 48.4%, up 0.2 percentage points, while the employment index held steady at 48.4%. The suppliers’ delivery index reached 50.2%, an increase of 0.1 percentage points from the previous month, according to the National Bureau of Statistics. By company size, large companies registered 50.2%, above the expansion threshold, while the index was 48.4% for medium-sized companies and 47.5% for small companies. The readings for medium-sized and small companies fell by 1.3 and 1.4 percentage points, respectively. The gap indicates that the contraction in the official survey was sharper among smaller and medium-sized companies, while large companies remained in expansion territory.
The decline extended to non-manufacturing activity: the business activity index came in at 49.7% in October, down 0.5 percentage points, while the new orders index in the sector fell to 44.4% after dropping 2.1 percentage points. The composite output index also registered 49.7%, down one percentage point from the previous month. The chief statistician said the manufacturing, non-manufacturing activity and composite output indexes all declined in October. In markets, a Reuters report on November 3 said the CSI 300 fell 8.5% in October, its worst monthly performance in more than a decade. Reuters had reported separately that China’s securities regulator had told investment banks, according to three people familiar with the matter, to temporarily halt IPOs and large shareholder sales until markets recovered; the agency said it could not immediately verify the report.
In Reuters’ report on the IPO guidance, the regulator was said to have met with investment banks in the preceding days and provided informal “window guidance.” This came amid declines in Chinese stocks and investors selling shares in energy and technology companies, according to the agency’s report published on November 3. By midday that day, the CSI 300 had pared its early losses to 0.1%, while the Shanghai Composite Index was down 0.7%, after both indexes fell more than 1% in early trading. The report published on November 4 about YMTC suspending its IPO plans could not be verified through a reliable open source. The PMI data and the separate report on the guidance therefore remain context for industrial activity and the stock market, and do not by themselves confirm that the company halted its IPO plans.