October looks like it was slightly better for China’s factories, judging by the official survey of manufacturing activity released at the weekend.
Activity expanded at a slightly slower pace in October but was slightly above analysts’ expectations, suggesting a continuing economic recovery as the economy rebounds from the coronavirus shock.
The National Bureau of Statistics official manufacturing Purchasing Manager’s Index eased to 51.4 in October from 51.5 in September, remaining well above the 50-point mark that separates growth from contraction.
Analysts had forecast a slip to 51.3.
The survey results confirm that the Chinese economy has shaken off the impact of the pandemic on the domestic economy, but the continuing weak demand in offshore markets remains the big concern, though exports seem to have brightened last month.
The official PMI, which largely focuses on big and state-owned firms, showed overall new orders remained steady at 52.8, while new export orders rose to 51.0, improving from 50.8 a month earlier.
But smaller firms continued to struggle. A sub-index for those companies stood at 49.4 in October, slipping back into contraction from September’s 50.1.
Companies also shed jobs for a sixth month in a row, and at a faster pace. A sub-index for employment fell to 49.3 from September’s 49.6.
A second survey on the services sector showed activity expanded for the eighth month in a row, hitting the highest level since October 2013, as the removal of restrictions on public gatherings and movement bolstered consumer demand during the 8 day holiday at the start of the month..
The survey result came at the end of a week when China’s new five-year plan was laid out for discussion by the country’s leadership.
Technology will form a big part of the new plan, according to Xinhua.
“Making major breakthroughs in core technologies in key areas, China will become a global leader in innovation,” according to the communique published by Xinhua.
China will increase the incomes of low-income groups and expand middle class over the 2021-2025 period of the new plan, Ning Jizhe, the vice head of the National Development and Reform Commission, said at a news conference in Beijing on Friday.
China aims to let consumption play a basic role in supporting economic growth, said Ning. At the same conference, Han Wenxiu, a senior Communist Party official, said China will expand market access for foreign investors.
Xinhua, the official Government newsagency said at the weekend.
“A new “dual circulation” development pattern, where domestic and foreign markets can boost each other with the domestic market as the mainstay, has been introduced” in the new plan.
The second survey of Chinese manufacturing from Caixin/Markit is out later today. The Caixin services survey will be out next Wednesday and China’s October trade data will be released on Saturday. That will confirm or undermine the improvement in export orders reported in the NBS survey.
