China: Manufacturing PMI contracts for the 7th straight month in October – UOB Group

China’s official manufacturing PMI fell by a larger-than-expected 0.8 pt to 49.0 in October (Bloomberg est: 49.6, September: 49.8), UOB Group's Economist Ho Woei Chen report.

October moderation is seen broadly across the main components

"The contraction (reading<50) in manufacturing activities has stretched into the 7th consecutive month, the longest on record which was matched by declines during Aug 2015 – Feb 2016. The larger-than-expected slowdown in October was due in part to the week-long National Day and Mid-Autumn Festival holidays, but also indicated a softening outlook for the manufacturing sector hit by US’ tariffs. The full impact of the tariffs will likely be felt in the coming months while the de-escalation in tensions with the US and a potential trade deal may cushion the impact."

"The moderation in October was seen broadly across the main components of the CFLP manufacturing PMI. Production (49.7 from 51.9 in September) slipped into contraction for the first time in six months. New orders (48.8 from 49.7 in September), new export orders (45.9 from 47.8 in September) and employment (48.3 from 48.5 in September) fell more steeply. By enterprise size, the outlook for large-sized enterprises (49.9 from 51.0 in September), medium-sized enterprises (48.7 from 48.8 in September) and small-sized enterprises (47.1 from 48.2 in September) all weakened in October, led by the large and small enterprises."

"The official non-manufacturing PMI rose 0.1 pt to 50.1 in October (Bloomberg est: 50.1, September: 50.0), with the pick-up in the services index (50.2 from 50.1 in September) offsetting a larger contraction in the construction index (49.1 from 49.3 in September) as the holidays lifted domestic spending and tourism in the month."