BEIJING (Reuters) – China's manufacturing sector grew barely last month after being stabbed in September, a private survey showed, while…
BEIJING (Reuters) – China’s manufacturing sector grew barely last month after being stabbed in September, a private survey showed, while an increased decline in export orders triggered increased pressure on the economy when a trade war with the United States intensified.
An employee works on a carbon fiber production line inside a factory in Lianyungang, Jiangsu Province, China October 27, 201
8. REUTERS / Stringer
Caixin / Markit Manufacturing Purchasing Managers Index (PMI) for October, released on Thursday, lined up to 50.1 from 50.0 in September. Reuters polluters had predicted a reading of 49.9, just outside the 50-mark that shares expansion from contraction.
The fairly basic growth last month was in line with an official PMI survey released on Wednesday, which showed that China’s manufacturing sector expanded at the lowest rate over two years.
Brittany in the major manufacturing sector, an important domestic and global driving force for growth, supports the expectation of further stimulus support from Beijing as it tries to prevent a sharp decline for the economy. The Sino-US trade unions and the risks from the dispute to the Chinese and global economies have recently rattled on the financial markets.
The Caixin survey showed factory output fell for the second straight month and was only fractionally above the neutral 50.0 level, including weaker demand at home and abroad. It drew the company’s trust among manufacturers to an 11 month low.
“China’s economy has not seen any obvious improvement,” said Zhengsheng Zhong, chief of macroeconomic analysis at CEBM Group, in a note accompanying the survey.
“The expansion of the manufacturing sector was still weak. Production and business confidence continued to cool despite stable demand. The pressure on production costs did not ease.”
While new export orders – an indicator of future business – improved to 48.8 from 47.6 in September, they remained in the contraction phase for the seventh consecutive month as the trade war with the United Kingdom was deepened.
October was the first full month after the latest US customs duties came into force.
Washington and Beijing hit additional fees on each other’s goods on September 24, and US President Donald Trump has threatened to beat China with more information.
External pressure already begins to lower activity in large parts of China’s economy, which has grown at the weakest pace since the global financial crisis in the third quarter. Analysts say business conditions get worse before they get better.
Sub-index for overall new orders – domestic and foreign – rose slightly to 50.4 from 50.1 in September.
The investigation also showed that the price pressure pressures were high for Chinese manufacturers, due to higher costs for raw materials such as steel in particular. It may further push on profit margins and risk waning a vicious circle of lower business investment, job losses and deepening of the wider economy.
China’s manufacturing sector has been hampered by a reduction of credit sources in connection with Beijing’s multi-annual breakdown of corporate debt and risky lending practices, with smaller companies, particularly under pressure.
Policymakers have taken a series of measures to reduce the risks of growth, including injecting more liquidity, lowering funding costs, reducing taxes and fees, and pledging more support for private companies.
In view of higher costs and weak demand, Chinese manufacturers have reduced staff levels for about five years straight.
The space industry research and manufacturing sector remained the worst performing sector in the third quarter, according to a report on Employment Indices jointly released by the China Institute for Employment Research and a leading Chinese career platform Zhaopin.
“The trade / import and export sector continued to decline in jobs in the third quarter of 2018, reflecting the continued influence of the US-China trade war,” the report concluded.
However, the decline in wage deductions in the manufacturing sector slowed down in September, according to the Caixin survey, focusing more on small and medium-sized enterprises that are crucial to China’s employment.
Chinese officials have promised to prevent extensive job losses.
Reporting by Cheng Fang and Ryan Woo; Editing Shri Navaratnam
Our Standards: Thomson Reuters Trust Principles.