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China’s manufacturing PMI performance worse-than-expected in October

The official manufacturing purchasing managers’ index was at a score of 50.2 points, lower than analysts' expectations.

IG Analyst

Publication date : 2018-10-31T02:10:00+0000

Workers in a factory

China’s manufacturing sector slowed down in October from the previous month. The official manufacturing purchasing managers’ index (PMI) was at a score of 50.2 points, lower than analysts' expectations.

Manufacturing PMI for this month weakened compared to 50.8 points in September but it remained in expansionary mode, data from the National Bureau of Statistics showed. A reading above 50 points indicates an expansion, while a reading below that shows that the sector is in a contractionary mode.

Analysts in a Reuters poll had expected the sector to perform at 50.6 points for the month.

The bureau said its non-manufacturing index came in with a score of 53.9 points, lower compared to 54.9 points in September.

The factory slowdown could be attributed to the ongoing United States (US)-China tariff war, as some US tariffs went into effect in October.

Just weeks ago, the International Monetary Fund said that the trade war escalation between the duo is likely to hit China harder than the US, and shaved the growth prediction for China next year to 6.2%, which will make it the slowest growth rate since 1990.

For the third quarter, China’s gross domestic product growth increased 6.5% on a year-on-year basis. The performance was slower than the second quarter, and the weakest pace since the first quarter of 2009.

The Chinese Yuan has also recently been treading on new lows. Analysts expect the currency to fall further, as the slowing economy would not support the strength of the Yuan.

The Chinese Yuan was ¥6.97 against the greenback on Wednesday morning.

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