China’s Manufacturing Sector Expands Marginally

China’s manufacturing sector expanded only slightly in October as output remained broadly unchanged amid marginal increase in new business, survey data from IHS Markit showed Thursday.

The Caixin Purchasing Managers’ Index came in at 50.1 in October versus 50.0 in September. The reading was expected to remain unchanged at neutral level of 50.0.

A score above 50 indicates expansion. Prior to September, the health of the sector had improved for 15 consecutive months.

According to official survey, the factory PMI slid to 50.2 in October from 50.8 in September.

Production was little-changed in October due to relatively subdued market demand. After stagnating in September, new orders grew slightly in October despite the amount of new export business falling for the seventh month.

Further, the survey showed that employment fell again in October, thereby extending the current sequence of job shedding to five years. That said, the rate of reduction was the slowest seen since May.

Prices data signaled another squeeze on operating margins as input costs continued to rise at a faster rate than output charges. The rate of cost inflation accelerated to the second-sharpest in nine months.

Although firms were generally optimistic that output would increase over the next year, sentiment dipped to an 11-month low amid concerns over current subdued market conditions and the impact of the ongoing China-US trade dispute.

The latest survey data, while not as bad as some feared, still paint a fairly downbeat picture, Julian Evans-Pritchard, an economist at Capital Economics, said.

Overall, the PMIs for October suggest that growth remained on a downward trajectory at the start of the fourth quarter, with more weakness likely in the coming months, the economist added.