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Chinese factory activity shows significant growth in October

By Hugh Wilson

Output and new orders expanded last month despite continuing Sino-US trade war

Chinese manufacturers reported the strongest improvement in operating conditions in October since February 2017, according to the Caixin/Markit manufacturing Purchasing Managers’ Index (PMI).

The month saw a significant increase in both output and new orders, fuelled by an increase in exports. Purchasing activity also increased as a result.

The PMI stood at 51.7 in October, up from 51.4 the previous month. Analysts polled by Reuters had predicted a PMI of 51.0.

Dr Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group, a Caixin subsidiary, said: “Both domestic and foreign demand improved substantially. The sub-index for new orders stayed in positive territory and rose to the highest level since January 2013.

“China’s manufacturing economy continued to recover at a relatively quick pace in October. New orders placed with companies improved substantially and new export orders rose at the fastest pace since the Sino-US.trade war broke out.”

Nevertheless, the index showed that business confidence remains weak and that the labour market had contracted in October. The index also stands in stark contrast to official manufacturing data released on Thursday showing a contraction in factory activity for the sixth month running.

The Caixin survey focuses on more small and medium-sized businesses, while official figures include more data from large and often state-owned enterprises, suggesting smaller private manufacturers are proving more agile and adaptable in the face of economic uncertainty.

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