“That said, the absolute domestic manufacturing and electronics PMI levels are still a far cry from the (numbers) seen a year ago”, she added.
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A PMI reading below 50 indicates contraction while a reading above 50 indicates growth. Conversely, capital goods firms saw deteriorating conditions in the latest month as output and new orders declined for the first time since September 2014 and August 2014, respectively. It is important to point towards the fact that a reading above 50 is indicative of expansion in the sector. “Typically in years where the economy experiences global fragility, orders come in later – November to early December – compared to normal years, which will see a pick-up during the months of September to October”, said Barclays economist Leong Wai Ho.
The closely watched manufacturing index eased just 0.1 point to 50.1 in October, a hair better than the 50.0 analysts had expected.
In a few negative news for the Chinese economy, it was reported today that China’s manufacturing contracted for the third consecutive month in October in a sign of weakness in the world’s second largest economy.
According to the National Bureau of Statistics’ report, China’s official Purchasing Managers’ Index (PMI) stood at 49.8 last month, showing further fall for the third straight month, AFP reported.
Sub-indexes of the manufacturing PMI showed total new business fell only modestly because export orders were stronger in October.
Said Mr Irvin Seah, a senior economist at DBS: “China now is a big concern for everyone”. Recent surveys from a few pockets of the country, including energy-linked areas like Dallas and Kansas City, have suggested a possible stabilisation of activity, while production in NY and Philadelphia continued to deteriorate last month.
“Total new business declined only modestly, helped in part by a renewed increased in new export orders”.
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In a bid to shore up growth and meet Beijing’s 2015 growth target of about 7%, Beijing has cut interest rates six times since November and lowered the amount of cash that banks must hold as reserves several times to encourage lending.
