China’s Factory Activity Declines for Second Month Straight

According to reports, China’s factory activity saw a notable decline in October for the second consecutive month. High priced raw materials and slowing demand were one of the leading factors to hurt factory output.

Data from the National Bureau of Statistics NBS said the purchasing manager’s index PMI was recorded at 49.2 this month whereas the last month’s PMI was recorded at 49.6. Analysts had forecasted the PMI for October to be around 49.7, far from the actualized reports.

China’s manufacturing industry has greatly declined this year due to environmental issues, power supply shortage and increasing prices of raw materials. The reports also concluded that the sub index for output prices also increased to 61.1, the highest ever recorded since 2016.

Zhang Liqun, analyst at China Logistics Information Center stated, “About one-third of the surveyed companies’ listed insufficient demand as their biggest difficulty, indicating inadequate demand had restricted their production. The production index has dropped to the lowest level since it was published in 2005, excluding the global financial crisis period in 2008/09 and the covid outbreak in February 2020. The output price index rose to the highest level since it was published in 2016. These signals confirm that China’s economy is likely already going through stagflation.”

Reports also showed that non-manufacturing PMI went up from 52.4 to 53.2 in the month of September. The October composite PMI was recorded at 50.8 including manufacturing and services activity both.

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