China experienced a revival in manufacturing activity in October, as firms increased their production and purchasing to satisfy greater demand amidst a boost in confidence, according to survey results from S&P Global released on Friday.
The Caixin manufacturing Purchasing Managers' Index (PMI) increased to 50.3 in October, up from 49.3 in September. A PMI reading above 50.0 signifies growth. Similarly, the National Bureau of Statistics reported that the official PMI saw factory activity expand for the first time in six months, reaching 50.1 in October from 49.8 in September.
Senior Economist Wang Zhe of the Caixin Insight Group noted that the survey reflects stabilized market demand and heightened optimism, indicating the effectiveness of new government policies in influencing the sector.
"China's ability to achieve its 2024 growth target hinges on a sustained recovery in consumer demand, necessitating policy measures that more effectively increase household disposable income," Wang highlighted.
The S&P survey noted that new business grew at its fastest rate in four months, propelled by improved fundamental demand and ongoing business development initiatives. Although export orders decreased, this contraction occurred at a slower rate.
Manufacturers responded to the increased demand by boosting production at an accelerated speed, with confidence reaching its highest point in five months.
October also saw a rise in purchasing activity due to the robust growth in new work, leading to an accumulation of purchase stocks. Post-production inventory levels grew as well, driven by increased production.
Firms remained cautious regarding hiring, choosing not to replace departing employees. As a result, employment decreased at its most significant rate in nearly eighteen months.
Regarding pricing, the survey indicated an increase in average input costs for the first time in three months, influenced by higher prices for metals and energy. Consequently, average selling prices rose for the first time since June, as businesses passed on higher input costs to consumers. However, export charges continued to decline as exporters faced intensified competition.