Manufacturing sector activity rises in Oct on robust order flow: PMI

Roman Schwartz
November 4, 2018

Zhao said the manufacturing supply and demand in October experienced fluctuations due to factors including the National Day holiday and a complicated external environment. At the same time, input cost inflation remained sharp and delivery times for materials lengthened amid stretched global supply chains.

Panellists were especially hopeful of increased export orders, particularly in Asia and the US. "Fearing a protracted period of weakness, manufacturers also reduced headcounts, marginally, for the first time since the Brexit vote". Optimism reflected new product launches, new capacity and export opportunities.

Survey data pointed to robust demand conditions at Japanese manufacturers in October. Incomplete workloads declined at a faster extent than in September, but the rate of depletion was only modest overall.

China's official index fell to 50.2 last month, down from 50.8 in September, its weakest since 2016.

"Housing and commercial construction activity both rose more slowly in October, and at rates that remained below long-run survey averages". However, the rise in staffing levels eased noticeably as some firms looked to reduce expenses. Price gauges continued to point to upward inflationary pressures, but were similar to Septembers readings. In PMI parlance, a print above 50 means expansion, while a score below that denotes contraction.

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Civil engineering in October grew at the strongest pace since July past year, offsetting the weakest growth in housebuilding and commercial construction in seven and five months, respectively.

"The larger-than-expected fall in the manufacturing PMI, from 53.6 to 51.1 (consensus 53.0), left the balance at its lowest level since July 2016 immediately after the European Union referendum, and confirmed that the sector made a weak start to Q4", says Andrew Wishart, an economist at Capital Economics. Planned expansion into new markets and stronger sales forecasts supported business confidence.

'October saw a worrying turnaround in the performance of the United Kingdom manufacturing sector, ' Director at HIS Markit Rob Dobson said.

While new export orders - an indicator of future activity - improved to 48.8 from 47.6 in September, they remained in contraction phase for the seventh consecutive month as the trade war with the United States deepened.

Taiwanese companies generally reported slack demand from customers at home and overseas, and were negative about the rest of the year amid concern that the US-China trade dispute would affect their performance, Fiddes said, adding that output levels are unlikely to improve in the near term as purchasing activity slows.

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