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BEIJING (MNI) - Activity in China's manufacturing sector was stable in
October as output growth eased to the lowest in four months but new orders rose
slightly, according to the latest Caixin Manufacturing Purchasing Managers'
Index (PMI) released Wednesday.
The headline manufacturing PMI stood at 51.0, unchanged from September, but
remained above the 50 break-even mark for fifth consecutive month, according to
data compiled by IHS Markit for Caixin magazine.
Readings above 50 indicate expansion in the manufacturing sector while
readings below 50 indicate contraction. The higher the PMI reading above 50, the
faster the expansion in the sector. The lower the reading below 50, the faster
The stable performance shown by the Caixin index -- which focuses on
smaller and medium-size companies -- was somewhat at odds with the official
manufacturing PMI jointly released on Tuesday by the China Federation of
Logistics and Purchasing and the National Bureau of Statistics. The CFLP/NBS PMI
fell more than expected to 51.6 in October from 52.4 in September.
The data show manufacturing production grew only slightly, marking the
weakest level in four months. "At the same time, confidence toward the 12-month
outlook for production moderated to its second-lowest level since August 2016,"
Total new business expanded at a moderate pace, while new export orders
rose slightly, following a marginal upturn in September.
Average input prices saw a sharp increase in October to the highest since
early 2011 due to tightened environmental inspection policies and low stock
levels among suppliers, Caixin said.
As a result, the average time taken for input delivery lengthened further.
Manufacturers raised their output prices further to protect margins, but
the increase was not as large as the previous month.
Survey participants said they were increasingly cautious about their buying
activity during October.
"Stocks of inputs declined for the second month running as a number of
firms commented on the increased use of current inventories to meet production
requirements," Caixin said.
Stocks of finished goods also declined marginally in October.
Companies continued to take a relatively cautious approach to employment,
with manufacturers lowering workforce numbers to boost efficiency.
"Reduced staffing levels and higher than expected new orders led to a
further increase in backlogs of work. Notably, the rate of accumulation was the
joint-steepest since March 2011 (on par with July 2016)," Caixin noted.
"The manufacturing sector expanded steadily in October," said Zhong
Zhengsheng, director of Macroeconomic Analysis at CEBM Group, a research
subsidiary of Caixin. "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." Zhong warned.
The Caixin Manufacturing PMI is based on data compiled from monthly replies
to questionnaires sent to purchasing executives at more than 500 manufacturing
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