China PMI for October Shows Signs of Economic Rebound

Tuesday, 5 November 2024, 16:00

China's PMI data for October indicate a positive shift in the economy as manufacturing and services sectors show signs of recovery. The official manufacturing PMI rose to 50.1, shaking off five months of contraction, while the non-manufacturing PMI increased to 50.2. This data suggests that China's economic activity is beginning to stabilize, hinting at a potential rally ahead.

Scmp — China PMI for October Shows Signs of Economic Rebound

China's Manufacturing Sector Bucks Expectations

China's manufacturing sector showed broad improvement in October, driven by the impact of Beijing's stimulus efforts. The official manufacturing purchasing managers' index (PMI) rose to 50.1, surpassing expectations and marking the end of five consecutive months of contraction.

Key Highlights:

Manufacturing PMI: 50.1 in October vs. 49.8 in September
New order subindex improved, but export orders fell to 47.3
Caixin/S&P Global PMI also increased to 50.3

The 50.1 level indicates the smallest possible expansion, suggesting that the impact of industrial production's bounce back in September might persist, according to Lynn Song, chief economist for Greater China at ING.

Non-Manufacturing PMI Shows Growth Amid Construction Challenges

The official non-manufacturing PMI, which encompasses both the service and construction sectors, rose to 50.2 in October, propelled by robust service sector activities. Services experienced a boost during the National Day celebrations, raising the service sector subindex to 50.1.

Concerns Remain in Construction:

Construction sector PMI fell to 50.4, the lowest since the pandemic
New orders in construction improved to 43.5 from 39.5 in September

Despite these challenges, the recovery in services was significant, according to Evans-Pritchard at Capital Economics. The Caixin services PMI matched the official PMI, rising to 52 in October.

October Data Reflects Overall Economic Recovery

China's composite PMI, tracking manufacturing and non-manufacturing sectors, also improved, standing at 50.8. This increase is a positive indication of broad economic recovery as evidenced by both the official and Caixin/S&P Global composite PMIs rising in October.

Looking Ahead:

Evans-Pritchard believes that continuing stimulus efforts will enhance economic momentum in the coming months. However, experts caution that it may be premature to conclude that this stabilization is sustainable, emphasizing the importance of future fiscal policies.

This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.