Economy

Satellites Show China Manufacturing Output Contracted in October

Satellites Show China Manufacturing Output Contracted in October

The new export order index declined 1.1 points to 46.9. In contrast, the PMI for large manufacturers stood well above 50. New export orders contracted for the fifth straight month. It was a touch above the 50-point mark that separates growth from contraction for a 27th straight month.

The latest reading suggests a further slowing in the world's second-biggest economy and could prompt more policy support from Beijing on top of a raft of recent initiatives.

In October 2018, China's manufacturing purchasing managers index (PMI) was 50.2 percent, a decrease of 0.6 percentage point from last month, the manufacturing industry continually located in the expansion interval, while the pace of expansion has slowed down.

China's $12 trillion-a-year economy already was cooling as communist leaders tried to steer it toward more self-sustaining growth based on domestic consumption instead of exports and investment.

In addition, the import sub-index, considered a gauge of domestic demand, was also at its lowest level for at least a year at 47.6 - down from 48.5 in September.

China's exports unexpectedly kicked into higher gear in September, largely as firms front-loaded shipments to dodge stiffer U.S. duties, though analysts see pressure building in coming months. The continued slump in export orders may be bearing that scenario out.

'Besides an expected reserve requirement ratio (RRR) cut next January, we expect future supportive policy actions to be measured.

More news: Trump signals additional troop increase along U.S.-Mexico border

October is the first full month after the latest USA tariffs went into effect.

Breaking 7 could further undermine market confidence and potentially trigger fresh United States accusations that China was allowing the Yuan to weaken to blunt the impact of tariffs that Washington has imposed on Chinese goods.

Chinese statistics bureau statistician Zhao Qinghe wrote in an analysis of the data that manufacturing activity in October was hit by long national public holidays and a "complex and variable external environment" that caused "fluctuations" in demand and supply.

The non-manufacturing PMI, which reflects activity in the construction and services sectors, also worsened to 53.9 from September's 54.9 reading.

Manufacturers have come under pressure from the escalating trade war between the USA and China.

On the fiscal side the government is stepping up stimulus through infrastructure projects, and has also pledged more tax cuts next year to support growth.

Already, China reported slower-than-expected growth of 6.5 percent in the third quarter of the year - its weakest pace since the first quarter of 2009.


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