China's manufacturing activity was stable last month but production increased at its slowest rate in four months, a report released yesterday showed.
The Caixin China General Manufacturing Purchase Managers' Index stood at 51 for October, the same as September, according to the survey conducted by financial information service provider Markit and sponsored by Caixin Media Co Ltd.
A reading above 50 indicates expansion, while a reading below reflects contraction.
Sub-indices showed that new orders rose slightly faster, while output growth fell for the third straight month.
At the same time, companies continued to shed staff amid company-downsizing and efficiency-raising efforts, the report said.
The sub-indices for input costs and output prices both eased from the previous month but remained rather high.
"China's manufacturing sector expanded steadily in October," Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group said. "But the stringent production curbs imposed by the government to reduce pollution and relatively low inventory levels have added to cost pressures on companies in midstream and downstream industries, which could have a negative impact on production in the coming months."
Released yesterday, the official PMI in October fell to a three-month low of 51.6.
Divergence of the official data from Caixin data is common as the official manufacturing PMI survey covers 3,000 large and small companies, while the Caixin PMI covers 500, with a focus on small and medium sized businesses.
Wang Tao, chief China economist of UBS, said she expected October data to show softer activity with weaker industrial production and property investment, lower export growth, and largely stable overall fixed asset investment growth.
She said consumer inflation may be warmer last month but factory gate inflation was likely to be cooler.