PMI shrinks for 3rd straight month
Print Edition
CHINA’S manufacturing activity shrank for the third straight month in October but the contraction was flat from September, with the National Bureau of Statistics suggesting the data signaled stability in the economy.
The official Purchasing Managers’ Index, a comprehensive gauge of operating conditions in large state-owned industrial companies, was flat from September at 49.8 last month, the National Bureau of Statistics and the China Federation of Logistics and Purchasing said yesterday.
The PMI reading was 49.7 in August.
A reading above 50 means expansion, and anything below signals contraction.
Zhao Qinghe, an analyst at the bureau, said the data suggested the economy is becoming more stable as domestic demand has edged up while easing policies have filtered through to the real activities.
“Market supply and demand are better balanced while we see more manufacturing of high-tech products and consumer goods,” Zhao said. “Some traditional industries, such as non-ferrous metal, are still contracting to digest overcapacity.”
The official PMI’s component indexes showed industrial production slipped 0.1 point from a month earlier to 52.2, while new orders rose 0.1 point to 50.3. The index for high-tech products stood at 54.6 and for consumer goods at 52.2, both better than the headline figure.
Liu Ligang, an economist at Australia & New Zealand Banking Group Co Ltd, said the readings suggested manufacturing activity was stabilizing, but it was too early to confirm a bottoming out.
“The central bank should continue to be accommodative and keep market interest rates low,” Liu said.
China’s economy grew 6.9 percent from a year earlier in the third quarter — the slowest pace since the aftermath of the global financial crisis in 2009.
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