ExplainerChina’s stimulus seems to be trickling through, but is it too early to tell?
Indices of sentiment in China’s manufacturing sector both returned to expansion in October, while non-manufacturing also improved
1. Manufacturing ‘bucks’ expectations
China’s manufacturing sector showed broad improvement in October, with the impact of Beijing’s stimulus drive seemingly becoming felt.
Readings above 50 indicate expansion on a monthly basis, while one below 50 suggests contraction.
Within the official manufacturing PMI, the overall new order subindex edged up, even although the new export order element was 47.3 in October, a further decline from 47.5 in September.
“The 50.1 level is the smallest possible expansion for the PMI, but nonetheless bucks expectations for continued contraction, and is a positive sign that the small bounce back of industrial production that we saw in September could continue,” said Lynn Song, chief economist for Greater China at ING.
According to the Caixin survey, incoming new orders placed with Chinese manufacturers increased at the quickest pace in four months. That also pushed production expansion to the quickest pace since June.
Manufacturers’ confidence about future output improved, as their optimism levels climbed from September’s low to the highest level in five months.