China Manufacturing Activity Returns To Growth

(RTTNews) - China's manufacturing activity returned to growth in October as companies ramped up production and purchasing to meet higher demand amid improving confidence, survey results from S&P Global showed on Friday.

The Caixin manufacturing Purchasing Managers' Index rose to 50.3 in October from 49.3 in September. A reading above the neutral mark of 50.0 indicates expansion. The official PMI survey results published by the National Bureau of Statistics showed that the factory activity grew for the first time in six months. The PMI hit 50.1 in October, up from 49.8 in September.

Caixin Insight Group Senior Economist Wang Zhe said the manufacturing survey show that market demand stabilized and optimism improved, suggesting that the new policies implemented by the government had an impact on the sector.

"Achieving China's 2024 growth target will depend on a sustained recovery in consumer demand. That means policy efforts should focus on increasing household disposable income more effectively," said Zhe.

New business grew at the fastest pace in four months, driven by better underlying demand and successive new business development endeavours, S&P survey showed. Export orders declined again but at a slower pace.

In response to rising demand, manufacturers raised production at an accelerated pace. Confidence among respondents improved to the highest level in five months.

Purchasing activity increased in October as there was a strong growth in new work. This has led to further accumulation of stocks of purchases. Post-production inventory holdings also increased on the back of higher production.

Companies were cautious about hiring with the non-replacement of job leavers. Employment declined at the fastest rate in nearly one-and-a-half years.

On the price front, the survey revealed that average input costs increased for the first time in three months due to higher metal and energy prices. Consequently, average selling prices grew for the first time since June as firms passed on higher input costs. Export charges continued to decline as exporters faced higher competition.