China Factory Activity Sustains Momentum, Caixin Survey Shows

- Nov 06, 2017-

China’s manufacturing activity expanded for the fifth consecutive month in October, with strict government environmental policies fueling inflation and contributing to delays in the delivery of supplies, a Caixin survey released on Wednesday showed.

The Caixin China General Manufacturing Purchasing Managers’ Index — closely watched by investors as one of the first available barometers for the health of the world’s second-largest economy — was 51.0 last month, unchanged from September. A number above 50 indicates an expansion in activity, while a reading below 50 points to a contraction.

An acceleration in new orders, including those placed by overseas customers, was offset by a decline in the production subindex, which had its weakest reading in four months.

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.”

The government has been intensifying its nationwide campaign to cut pollution, which has led to stricter controls on capacity and on production by high energy-consuming and polluting industries such as coal, steel and aluminum. Additional curbs are being imposed on these sectors over the winter months starting in mid-November as the heating season exacerbates the smog over northern China.

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