SHANGHAI: China’s factory activity has expanded at a slower pace for the first time since July, a private survey shows, as weaker overseas orders call into question the outlook for the country’s export-led expansion.
The RatingDog China manufacturing purchasing managers index slipped slightly to 52 from 52.1 in September, according to a statement yesterday.
The reading, which was above the 50 threshold separating expansion from contraction, matched the median forecast of economists surveyed by Bloomberg.
While output expanded at the fastest since April, growth in new export orders slipped to a three-month low. Business confidence eased from September, with average export charges declining for the first time in nearly a year.
Yao Yu, founder of RatingDog, said in the statement that anecdotal evidence suggested greater volumes of new work from customers in Asia, Europe and Africa.
At the same time, the pace of expansion in new export orders “was modest, with growth slowing among consumer and intermediate goods makers while accelerating for investment goods firms”, he said in the statement.
The relatively upbeat performance of September stands in contrast with official figures over the weekend that showed factory activity slipped back into contraction territory last month, with a subindex of new export orders slumping sharply to the lowest since May.
The private poll results, whose sample captures smaller and more export-oriented firms, have tended to be stronger than those from the government survey over the previous year as overseas demand boomed.
“The export-focused RatingDog PMI indicates that the export sector has continued to power ahead,” said Bloomberg Economics’ Chang Shu. “That stands in contrast to the broader weakness in manufacturing and construction activity captured by the official PMI.
“The divergence underscores a persistent trend: external demand continues to play a critical role in sustaining overall growth amid domestic sluggishness.”
Shipments abroad have been sustaining growth in the world’s second-largest economy by offsetting the squeeze from subdued domestic demand, as the property sector and the jobs market stay soft.
The lopsidedness has persisted even as the economy staged a rebound in the third quarter, reaching the lower end of Beijing’s annual target of 4.5% to 5%.
Chinese authorities have stepped up measured policies in recent weeks to bolster growth, including mortgage discounts for targeted home buyers and more local bond quota to spur investment. Still, the package is only meant to ensure China meets the government’s growth goal and doesn’t signal an easing cycle. — Bloomberg
