The Caixin Manufacturing purchasing manager index (PMI) for October edged up slightly by 0.1 percentage point from September to 50.1, representing slight expansion in manufacturing index, according to data released on November 1.
Specifically, new order index, purchasing inventory index and input price index were all rising above 50, while new export order index, employment index and manufactured inventory index surged below 50. Output index, ex-factory price index and output expectation index slowed down.
Employment in manufacturing industry continued to shrink, but the decline was the slowest since May. Input cost still climbed mainly due to rising price of raw material dominated by iron and steel. Manufacturers thus continued to raise ex-factory price for the 17th consecutive months. But they didn’t raise the price significantly for the sake of competitiveness. The increase in input cost was still higher than that in output price, leading a further decline in profits of manufacturers.
Manufacturing industry insiders’ confidence of the industry prospect for the next 12 months dropped to an 11-month low. However, it is widely believed that output will hike.
Zhong Zhengsheng, chief economist from Caixin thinktank, indicated that prosperity of manufacturing industry was still sluggish in October. Though demand was stabilized, production and enterprise confidence continued to cool down. Pressure on rising production cost didn’t reduce. New order index and employment index recovered from last month. New export order index also picked up from the lower record of last month, reflecting demand in the industry getting stabilized. Ex-factory price index slipped, but input price index saw remarkable rise. Pressure on increasing industrial price still existed. Supply time index fell slightly from sharp increase in last month. Manufacturers still faced pressure in turnover of capital.
Sun Chuanwang from Xiamen University said Caixin PMI recovered from previous month, indicating expansion in economic operation. Policy will focus more on improving industry potential instead of coping with change in external environment. Deployment for enlarging domestic demand and lowering costs are expected to be priorities of policies in the fourth quarter.
Translated by Vanessa Chen