China Manufacturing Activity Contracts On Falling Production

China’s manufacturing activity contracted in October as firms reported a fresh decline in production amid weak foreign demand, survey results released by S&P Global showed on Wednesday.

The Caixin manufacturing Purchasing Managers’ Index dropped to 49.5 in October from 50.6 in the previous month. The sector contracted for the first time since July.

There was a renewed fall in manufacturing production in October. Although moderate, the decrease contrasted with modest growth in the previous two months.

At the same time, new orders increased only marginally. Sluggish global economic conditions and high prices dampened sales. Export orders declined for the fourth straight month.

Lower production as well as muted client demand weighed on purchasing activity. Firms relied on current stock to offset the rising costs. On the other hand, weaker-than-expected sales and the delayed shipment of goods led to the sharpest growth in inventories of postproduction items since September 2015.

The survey showed that average delivery times for purchased inputs improved slightly in October.

Manufacturers’ reduced their staffing levels at the quickest pace since May. Softer customer demand and efforts to reduce costs led firms to readjust their workforce numbers.

Regarding prices, the survey showed that input prices grew at the fastest rate since January. Greater operating expenses were partly passed on to clients.

Business sentiment hit its lowest level since September 2022 due to the sluggish global economic climate.

“The economy has showed signs of bottoming out, but the foundation of recovery is not solid,” Wang Zhe, a senior economist at Caixin Insight Group said. “Demand is weak, many internal and external uncertainties remain, and expectations are still relatively weak.”

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