China’s economy recovers despite fall in manufacturing PMI

China’s manufacturing purchasing managers’ index (PMI) reached this year’s average level, indicating that manufacturing activities maintained expansion, according to data jointly released by the National Bureau of Statistics (NBS) and China Federation of Logistics & Purchasing on Tuesday. As for subsectors, high-end manufacturing and consumer goods manufacturing continued to see growth momentum. The economy continues to expand steadily.

Data shows that the manufacturing PMI stood at 51.6 percent in October, down 0.8 percentage points from last month, up 0.4 percentage points from last year. China’s non-manufacturing commercial activities index came at 54.3 percent in October, down 1.1 percentage points from last month, yet maintaining stable and rapid growth.

 

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Chinese official manufacturing PMI

 

“After two months of recovery, the PMI pulled back in October, yet still stood above the expansion-contraction boundary. This indicates that economic steady growth has become more obvious,” the Development Research Center of the State Council researcher Zhang Liqun said.

Among the five sub-indexes of the PMI, production index, new order index, raw material inventory index fell to different degrees. The employment index remained unchanged from last month. Supplier delivery time (reversal index) improved.

Zhang Liqun analyzed that the decline of order index indicates that export growth may slow down. Considering the recent decline in investment growth, demands in both domestic and international market have stabilized. Demands’ driving force for price increases weakened. The fell of price index is not only consistent with demand changes but also indicates that market signals have less stimulation on enterprises’ production. Considering changes in production, inventory, purchase quantity indexes, signs of economic booming fade away, and that of steady growth enhanced.

Chen Zhongtao from China Logistics Information Center also said that the fall of the index is mainly because that the pace of production and business activities changed due to the National Day holiday. On the whole, the economy continued to operate in a stable manager, and its quality and efficiency continued to improve.

Sub-indexes of both the manufacturing PMI and non-manufacturing PMI suggest that the economy maintained steady growth.

In breakdown, high-end manufacturing and consumer goods manufacturing continued to see growth momentum. The PMI in the automobile manufacturing industry, special equipment manufacturing industry, electrical machinery and equipment manufacturing industry stood at above 53.0 percent, much higher than the overall level of the manufacturing industry.

For sub-indexes of the non-manufacturing PMI, data shows that in October the business volume of accommodation, retail, rail transport and air transport have maintained a rapid growth, Business activities were active. The business activity index was higher than the overall level of the service industry.

Energy consumption data released on the same day also continued to pick up. Major indicators performed better than the same period last year and better than expected at the beginning of the year.

Morgan Stanley Huaxin Securities chief economist Zhang Jun said that based on the fact that China’s economy maintains a 6.9 percent growth in the first three quarters, the growth inertia can make its growth rate at 6.7 percent in the fourth quarter, which means that the full-year annual growth rate will reach 6.8 percent.

 

Source: Xinhua, NBS, CFPL