Workers work in a car chair manufacturing factory in Lindang County, Jiangxi, Northwest China’s Shaanxi Province.
Liu Xiao | Xinhua | Getty Images
China’s factory activity expanded for the sixth consecutive month in October, as business confidence grew to its strongest level in years, a private survey showed on Monday.
The Kaisin / Market Purchasing Managers ‘Index for Chinese production fell to 53.6 in October, higher than the analysts’ forecast of 53.0 in a Reuters poll. The latest reading was the highest since January 2011, the survey results showed.
BMI readings above 50 indicate amplification, while below that signal contraction. BMI measurements are continuous and indicate a monthly expansion or contraction per month.
China’s vast manufacturing sector is recovering as the country’s corona virus outbreak is largely under control. Wang Jie, senior economist at Keizin Insight Group, said the October Geisen / Market BMI showed that the country’s manufacturing recovery has continued to accelerate.
“Overall, recovery is about curbing domestic epidemics in the current macro-economy,” he said in a statement with the data release.
“Production supply and demand improved simultaneously. Companies were more willing to increase inventory. Prices were stable. Business operations improved and entrepreneurs were optimistic,” he said.
China’s official manufacturing BMI released over the weekend of the private survey was 51.4 as of October – the eighth consecutive month of expansion. Analysts polled by Reuters expect a reading of 51.3.
The official BMI survey generally votes for the majority of large businesses and state-owned enterprises. In comparison, the private casein / market survey has a large mix of small and medium enterprises.
External uncertainties
According to a recent Casein / Market survey, both demand and supply of Chinese-made products “continue to recover from the fall from the Govt-19 epidemic.”
Still, companies have been cautious about hiring, he noted. A complete recovery in employment “depends on strong and lasting business confidence,” he said.
“Economic indicators for consumption, investment and industrial production were better than expected in general, so the economic recovery is likely to continue for the next several months,” he explained.
“But there is still a lot of uncertainty outside of China, so policymakers should be wary of the postcoronic virus normalizing monetary and monetary policies,” he added.
He said the renewed Govt-19 eruptions in Europe and the United States were an external uncertainty cited by Wang, which may have contributed to weakening foreign demand for Chinese goods. He said this would reduce Chinese exports in the coming months.