China Manufacturing Pmi For October Drops

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China Manufacturing Pmi For October Drops

China's Manufacturing PMI For October Drops To 49.5

The month of October wasn't exactly all good for the Chinese manufacturing sector, as the recent PMI reading shows further contraction.

On the other side, we have the services sector, which is also struggling with slow growth due to weak demand (local/overseas) and macroeconomic challenges.

The Services Sector Also In Decline

In October, the PMI for manufacturing activity dropped to 49.5, while the previous month's print was seen at 50.2. So, within one month, the manufacturing sector moved from a little growth to contraction, which is not a good sign for the Chinese economy.

Even in September, the manufacturing activity was growing very little, but even that has gone with October's PMI reading. Since the start of 2023, this sector has been facing numerous headwinds, which has also affected Chinese exports to different sectors.

At the crux of this situation is weak demand from both local and overseas clients. For a country like China, exports play a key role in growth, but it appears that weak global demand has dented the exports as well.

In 2023, the manufacturing activities in China showed contraction for 6 months while only 10 months have passed so far. In simple words, 4 months showed growth while the rest showed contraction.

The demand inside China is also weak, which has further intensified after the problems arising from China's property sector. The real estate sector is still in the grasp of the debt crisis, which continues to get worse over time.

The services sector is also no different, as it went from a PMI reading of 51.7 to around 50.6, which is a change of -0.11 points. If the current pace continues, the next month's services PMI will also move into contraction.

If we look at the composite PMI of China, it also went lower from 52.0 to only 50.7. That's one of the weakest readings, which was only seen in December 2022.

In terms of foreign investment, there is also a trend of decline as investors are shying away from making any big investments.

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