Conditions for smaller Chinese manufacturing firms continued to deteriorate in October, although at a pace significantly slower than that seen in recent months.
The Caxin-Markit China manufacturing PMI gauge rose to 48.3 from 47.2 in September, well above the 47.5 level that had been expected by the markets. While activity levels have declined for eight months in a row, it marked the slowest pace of contraction seen since June this year.
PMI surveys measure changes in activity levels, with a level of 50 indicative of no change from one month to the next. A figure below 50, such as the one today, indicates that activity levels are contracting.
“Operating conditions faced by Chinese goods producers continued to deteriorate in October, albeit at the weakest rate in four months,” wrote Markit in a research note follow its release.
“Total new business declined only modestly, helped in part by a renewed increased in new export orders. This in turn contributed to softer contractions of output and employment in October.
Meanwhile, purchasing activity and inventories of inputs continued to fall amid reports of lower production requirements.
Widespread evidence of reduced raw material costs led to a further marked decline in cost burdens, which in turn were passed onto clients in the form of lower selling prices.”
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