Factory index drops to lowest in 2 years

Factory index drops to lowest in 2 years

At the same time, the rate of input cost inflation softened to its lowest since July 2017 and charges were lowered for the second month in a row. The indices vary between 0 and 100, with a reading above 50 indicating an overall increase compared to the previous month, and below 50 an overall decrease.

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The Caixin survey showed factory output dropped for the second straight month and was only fractionally above the neutral 50.0 level, amid weaker demand at home and overseas.

The China-U.S. trade disputes also drove down manufacturers' optimism about the 12-month business outlook to its weakest level in 11 months, according to the survey.

Manufacturers stepped up hiring in October to meet rising demand conditions; and job-creation during the month was the strongest since last December. That said, the overall level of positive sentiment fell in October and was below the series average.

This is the 15th consecutive month that the manufacturing PMI remained above the 50-point mark. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions.

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Morgan Stanley economist Robin Xing said the investment bank maintained its forecast on China's GDP growth in 2018 at 6.6 percent, stressing the role of consumption in sustaining growth.

Manufacturing gauges for some of Asia's most export-driven economies slipped into negative territory in October, highlighting the spillover effect from the US-China trade war. This means the manufacturing sector is growing more slowly, as Zhao Qinghe, a senior statistician from NBS' Service Survey Center, interpreted the PMI data.

China's economy grew at its weakest pace since the global financial crisis in the third quarter, as manufacturing output and infrastructure investment slowed. Input price inflation stayed marked in October, in spite of easing to a 28-month low.

Firms are also taking an "increasingly defensive position", Dobson said.

Faced with higher costs and sluggish demand, Chinese manufacturers have been reducing staff levels for about five years straight.

The People's Bank of China (PBOC) has cut the reserve requirement ratio for banks four times so far this year to spur commercial lenders to extend more credit. More tax cuts may be in the pipeline, experts said.