REPEAT: China Oct Caixin Mfg PMI Unchanged; Output Eases

Repeats Story Initially Transmitted at 03:11 GMT Nov 1/23:11 EST Oct 31

     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 contraction.

     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,"

Caixin said. 

     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

companies.

--MNI Beijing Bureau; +86 (10) 8532 5998; email: marissa.wang@marketnews.com

--MNI BEIJING Bureau; +1 202-371-2121; email: john.carter@mni-news.com

--MNI Beijing Bureau; +86 (10) 8532-5998; email: vince.morkri@marketnews.com