Manufacturing maintains growth despite slowdown

Expansion in China’s manufacturing activity slowed in October to a three-month low, indicating moderated but still steady economic growth in the fourth quarter.

The official Purchasing Managers’ Index, which measures vitality in the manufacturing sector, fell to 51.6 in October from September’s 52.4, the National Bureau of Statistics said today.

That fell short of market expectations for 52, although the sector remained in expansionary territory for a 15th consecutive month.

A reading above 50 indicates expansion, while a reading below that reflects contraction.

Zhao Qinghe, the bureau’s senior statistician, attributed the slowdown partly to a high base in September and fewer working days.

Tighter measures on environmental protection also hurt production levels of high energy consumption and high pollution industries, Zhao said.

The sub-index for production fell to 53.4 from September’s 54.7, and new orders fell to 52.9 from 54.8.

But Zhao said the PMI this month was still 0.4 points higher than October last year, and reached the average level this year.

High-tech and consumer goods sectors led the expansion in August, with their sub-indexes higher than the overall PMI.

Chen Zhongtao, an analyst with the China Logistics Information Center, said the October PMI remained at a relatively high level and revealed the steady foundation of economic conditions.

He said growth of supply and demand was balanced, employment was stable, and price increases were slower.

The Australia and New Zealand Banking Group said in a research note that the low October PMI indicated moderation in the fourth quarter from previous quarters, but it was unlikely to change the steady growth outlook.

The bank revised up its 2017 GDP growth forecast to 6.8 percent from 6.7 percent.

Today’s figures also showed the non-manufacturing PMI moderated to 54.3 from September’s three-year-high of 55.4.

Zhao said active spending during the National Day holidays boosted the consumer services sectors, while slower manufacturing activities hurt services for manufacturers.

A contraction of activity in the securities, real estate and residential services sectors overshadowed faster expansion in the hospitality, retail, transportation, tourism, broadcasting and Internet sectors.

NBS data showed China's gross domestic product expanded 6.8 percent year on year in the third quarter, slower than the 6.9 percent in the first two quarters, but well above the government's target for the year of 6.5 percent.

He Lifeng, head of the National Development and Reform Commission, said China's economy is expected to attain or surpass the government's annual growth target as the economy has seen a stronger trend of steady growth with structural progress and a positive outlook.