Chinese factory activity last month contracted for a sixth-straight month, data showed yesterday, as the key manufacturing sector suffers under the weight of a slowing domestic economy and the long-running US trade dispute.
The figures are the latest to highlight a slowdown in the world’s No. 2 economy, which in the third quarter expanded at its slowest rate for nearly three decades.
The closely watched Purchasing Managers’ Index (PMI), a key gauge of activity in the country’s factories, fell to 49.3 last month, China’s National Bureau of Statistics (NBS) said.
Photo: EPA-EFE
That is well short of forecasts of 49.8 and also down from September’s figure of the same amount.
China’s official PMI has fallen below the 50 mark that separates growth and contraction every month since April.
In a sign of further problems, the sub-index for new export orders was down 1.2 percentage points, the data showed.
Local industry had been affected by slow foreign trade and “falling market demand,” NBS senior statistician Zhao Qinghe (趙清河) said.
Julian Evans-Pritchard, senior China economist at Capital Economics in Singapore, said the reading showed that a slight improvement seen in September “didn’t mark the start of a sustained recovery.”
The decline in new export orders pointed to a further slowdown in export growth, he added.
While the figures were bleak, there is some optimism as China and the US show progress in trade talks, with a push to get US Presidents Donald Trump and Chinese President Xi Jinping (習近平) to sign a “mini” agreement this month.
China and US trade negotiators were scheduled speak again by telephone today, Beijing said yesterday, adding that negotiations were making “smooth progress.”
Beijing has implemented a number of measures to try and stimulate the economy, including slashing the amount of cash banks must keep in reserve in a bid to free up about US$126 billion to boost lending.
“The China-US trade war remains the main factor dragging on industrial production, while the long holiday break in the month also contributed to the decline,” said Yao Shaohua (姚少華), an economist at ABCI Securities Co Ltd (農銀國際証券有限公司) in Hong Kong. “Monetary policy doesn’t have much room for easing and fiscal policy has been doing a lot. Whether production can improve in the future still depends on how the trade talks go.”
Additional reporting by Bloomberg
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