China factory growth weakest in over 2 years

Employees working on a lithium battery production line at a factory in Haimen in China's eastern Jiangsu province.
Employees working on a lithium battery production line at a factory in Haimen in China's eastern Jiangsu province.PHOTO: AFP

BEIJING • China's manufacturing sector barely expanded last month and missed expectations, as both domestic and external demand ebbed.

The official Purchasing Managers' Index, released yesterday, fell to 50.2 last month, the lowest since July 2016 and down from 50.8 in September.

It was a touch above the 50-point mark, which separates growth from contraction, for a 27th straight month.

Analysts surveyed by Reuters had forecast the official gauge would dip to 50.6 for the month.

The latest reading suggests a further slowing in the world's second-biggest economy and could prompt more policy support from Beijing on top of a raft of recent initiatives.

A production sub-index fell to 52 last month from 53 in September, while a new orders sub-index declined to 50.8 from 52.

New export orders, an indicator of future activity, contracted for a fifth straight month and at the fastest pace in at least a year. The sub-index fell to 46.9 from 48 in September.

 
 

China's exports unexpectedly kicked into higher gear in September, largely as firms front-loaded shipments to dodge stiffer US duties.

October is the first full month after the latest US tariffs went into effect.

Washington and Beijing slapped additional tariffs on each other's goods on Sept 24, and United States President Donald Trump has threatened to hit China with more duties.

REUTERS

A version of this article appeared in the print edition of The Straits Times on November 01, 2018, with the headline 'China factory growth weakest in over 2 years'. Print Edition | Subscribe