Workers work in a vehicle chair manufacturing factory in Lintong district of Xi’an district of Shaanxi province, northwest China.
Liu Xiao | Xinhua | Getty Images
China’s factory activity expanded for the sixth straight month in October as business confidence grew strongest in years, a private survey showed on Monday.
The Caixin / Market Purchasing Managers’ Index for Chinese manufacturing came in October at 53.6, better than the 53.0 forecast by analysts at Reuters Poll. The latest survey was the highest since January 2011, survey results showed.
PMI readings above 50 indicate expansion, while those below that signal contraction. PMI readings are sequential and indicate month-to-month expansion or contraction.
China’s huge manufacturing industry is recovering because the outbreak of coronovirus in the country is largely under control. The October Sixin / Market PMI showed that the country’s manufacturing recovery continues to accelerate, said Wang Jae, senior economist at Casein Insight Group.
In a statement accompanying the release of the data, he said, “In short, recovery was the term in the current pandemic economy with domestic epidemics.”
“Manufacturing supply and demand improved at the same time. Enterprises were ready to raise a lot of inventions. Prices stabilized. Business operations improved, and entrepreneurs were confident,” he said.
The private survey followed the release of China’s official manufacturing PMI over the weekend, which peaked at 51.4 for October – the eighth consecutive month of expansion. Poll analysts were expected to read 51.3 by Reuters.
Officially the PMI survey consists of a large proportion of large businesses and state-owned companies. In comparison, the Private Caixin / Market survey has a large mix of small and medium-sized firms.
The latest Caixin / Market survey showed that both demand and supply of Chinese manufacturing goods continued to recover as “the Kovid-19 epidemic faded”, Wang said.
Still, companies remain cautious about hiring companies, he said. A full recovery in employment “depends on stronger and more permanent business confidence,” he said.
“As economic indicators for consumption, investment and industrial production for September were generally better than expected, it is highly likely that economic recovery will continue for the next several months.”
“But there are still many uncertainties outside China, so policymakers need to be cautious about normalizing postcolonovirus monetary and fiscal policies,” he said.
The renewed Kovid-19 outbreak in Europe and the US was an external uncertainty cited by Wang, which he said could contribute to a weak recovery in overseas demand for Chinese goods. He said that sugar exports could decline in the coming months.