The survey of Chinese manufacturing from the Caixin/Markit surprised yesterday with the best reading for four months, directly contradicting the bigger than expected fall in the official survey on Sunday from the country’s National Statistics Bureau (NBS).
The Caixin survey, which focuses on small to medium businesses (the NBS focuses on larger companies) was reported at a four-month high of 50.6 in October, compared with market consensus and September’s figure of 50.
That’s in contrast to the NBS survey’s reading of 49.2, down from 49.6 in September and indicating a slowing pace of activity.
An upturn in new orders which hit their highest level since June helped push the Caixin index into expansion territory, offsetting a number of subindexes which confirmed a slowing in output, sales and exports.
Power shortages and rising costs (China’s producer price index rose 10.7% in September) weighed on output, both export sales and employment fell for the third straight month; and buying levels were down again after rising in September.
At the same time, the gauge for delivery times hit the lowest point since March 2020.
Inflationary pressure intensified, with average input prices rising at the sharpest rate since December 2016, while the pace of output charge inflation also accelerated notably. The official survey showed a five-month high for rising cost pressures which seem to be a continuing problem area.
Rising cost pressures, shortages and slowing Chinese growth were a feature of manufacturing surveys across the Asian region – including Australia where the AIG/Markit fell 0.8 to 50.4 in October, indicating a further slowing in activity.
It was the fifth month in a s row that activity in Australian manufacturing has slowed and was the lowest reading for 13 months.
Similar surveys showed factory activity in October expanded in Vietnam, Indonesia and Malaysia as the pressures on demand and output from the pandemic and lockdowns eased.
Taiwan saw manufacturing activity growth accelerate on robust computer chip demand, while Japan’s factory activity expanded at the fastest pace in six months in October in an encouraging sign for the world’s third-largest economy where the Covid Delta wave has faded remarkably.
Material shortages and delivery disruptions drove up Japan’s input prices by the most in over 13 years.
In a sign of the patchy nature of Asia’s recovery, however, South Korea’s factory activity rose but at the slowest pace in 13 months in October on shrinking output and softer demand.
“While October Manufacturing PMIs point to a strong rise in manufacturing output, industry is likely to be working through huge backlogs of orders for many months to come and resulting supply shortages further afield are set to persist,” said Alex Holmes, emerging Asia economist at Capital Economics.
