UpdateChina Oct PMI declines to 50.4%, manufacturing to slow

01 November 2011 07:21  [Source: ICIS news]

China’s manufacturing sector is expected to slow down through the rest of 2011 because of softer demand from overseas markets.SHANGHAI (ICIS)--China’s manufacturing sector is expected to slow down through the rest of 2011 because of softer demand from overseas markets and export orders, industry sources said on Tuesday.

The country’s purchasing managers’ index (PMI) fell by 0.8 percentage points to 50.4% in October from September, according to data released by the China Federation of Logistics & Purchasing (CFLP) on Tuesday.

From September to October, the new orders index fell by 0.8 percentage points to 50.5%, while the production index dropped by 0.4 percentage points to 52.3%, according to the data.

The declining PMI indicates that economic growth will continue to slow in the near future, said Zhang Liqun, an analyst from CFLP.

The country’s third-quarter export and investment growth has slowed and companies are having problems with funding, Zhang added.

The new export orders index dropped by 2.3 percentage points from September to 48.6% in October, the data showed.

The decline reflects weaker demand from the international market due to the eurozone debt crisis, an analyst from China Customs said.

In October, both demand and production in China have dropped and are expected to decline further in the first quarter of 2012, according to an analyst from Huachuang Securities.

This is because orders were made three months in advance, the analyst added.

China’s import index declined by 3.1 percentage points to 47.0% in October, according to the data.

In October, the import index declined by 3.1 percentage points to 47.0% and the purchasing index declined by 10.4 percentage points to 46.2%, the data showed.

“It is the first time the purchasing index has declined to below 50% since the economic crisis in late 2008,” the Huachuang analyst added.

The PMI, which is a measurement of the monthly performance of China’s factories, is based on a survey of 820 manufacturers across 20 industries.

A figure above 50% indicates an expansion, while a figure below 50% represents a contraction.

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By: Dolly Wu
+65 6780 4359



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