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Monday, November 2, 2015, 10:10

Caixin China factory PMI rebounds in Oct

By Agencies
Caixin China factory PMI rebounds in Oct

BEIJING - The Caixin General China Manufacturing Purchasing Managers' Index (PMI), an indicator of manufacturing activity, moved up to 48.3 in October, the highest level since June this year, a private survey showed Monday.

The index was higher than 47.2 in September but remained in contraction zone, according to the survey conducted by financial information service provider Markit and sponsored by Caixin Media Co. Ltd..

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

The highest reading since June 2015 will likely fuel hopes that the industry's long slump may be bottoming out, but it remained well below the 50 mark, signifying a further contraction in activity that will raise doubts about whether the economy could see a modest pick-up in the fourth quarter.

Taken together with official factory and services sector surveys released on Sunday, the readings reinforced the view that business conditions in China are continuing to deteriorate but at a gradual albeit uneven rate, with no signs of a hard landing which recently spooked global investors.

Suggesting some improvement in sluggish global demand, the Caixin survey showed new export orders expanded for the first time since June, albeit marginally. The sub-index rose to 50.7 from 44.6 in September.

Demand at home remained sluggish, however. The overall new orders sub-index, which covers domestic and export orders, shrank for the fourth month in a row in October, though the contraction was more modest than in September.

"The slight upswing shows the manufacturing industry's overall weakening has slowed down, indicating that previous stimulus measures have begun to take effect," said He Fan, Chief Economist at Caixin Insight Group.

Manufacturers shed jobs for the 24th straight month on weakening sales, but again the rate of reduction was the weakest in three months.

"Weak aggregate demand remained the biggest obstacle to economic growth, and the risk of deflation resulting from the continued fall in the prices of bulk commodities needs attention," said He.

China's economy grew 6.9 percent between July and September from a year earlier, dipping below 7 percent for the first time since the global financial crisis.

Many economists have expected economic growth would bottom out in the third quarter, with a modest improvement late this year and into early 2016 as additional stimulus measures gradually take effect.

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