The October China Manufacturing Purchasing Managers' Index (PMI), released on November 1, shows a continued rebound for the fourth consecutive month, reaching its highest level in 18 months. This indicates that China's manufacturing sector remains stable and robust. According to Zhao Qinghe, a senior statistician at the National Bureau of Statistics' Service Industry Research Center, the sustained rise in PMI reflects the ongoing stability of China's economy.
As a widely recognized leading indicator of macroeconomic trends, the PMI provides insight into the health of the manufacturing sector and the broader economy. Zhang Liqun, a researcher at the State Council's Development Research Center, also noted that the PMI's upward trend in October suggests that China's economic growth has begun to stabilize.
According to an analysis report from the China Federation of Logistics and Purchasing, large manufacturing enterprises have seen a consistent increase in their PMI since July, reaching 52.3% in October. Mid-sized companies remained stable in July and August, but saw a rebound in the past two months, with their PMI rising above 50%—up 0.5 percentage points from September. Meanwhile, small businesses experienced only minor fluctuations over the last three months, suggesting that economic stabilization is gradually spreading to all business sizes.
A key driver behind the PMI recovery was the rebound in manufacturing production. In October, the production index reached 54.4%, up 1.5 percentage points from the previous month. This marks the highest level since May 2012 and has been the main force behind the manufacturing sector's recovery.
Zhao Qinghe attributed this improvement to timely policy measures aimed at stabilizing growth, adjusting structures, and promoting reforms. As these policies take effect, businesses are gaining more confidence, which has helped boost production levels.
With increased production, procurement activities have also become more active. The purchasing index in October stood at 52.7%, up 0.2 percentage points from the previous month, marking the third consecutive month above the 50% threshold and a nine-month high.
Domestic and international demand has also shown signs of recovery. The new orders index reached 52.5%, remaining above 52% for three consecutive months and hitting a relatively high level since May 2023. The new export orders index, reflecting international market demand, stayed above 50% for the third month in a row.
Despite slight declines in the new orders and export orders indices compared to the previous month, the report noted that these are normal fluctuations after the indices returned to higher levels. Overall, the positive trend in demand since the second half of the year remains intact.
However, Zhao Qinghe pointed out that not all sub-indices showed strong growth. While the production index rebounded significantly, other indicators like the employment index, inventory index, and supplier delivery time remained unchanged or slightly declined. The new orders index fell by 0.3 percentage points from the previous month.
Zhang Liqun added that although China's economic growth has stabilized around 7.5%, the foundation is still fragile, and market-driven growth remains weak. He emphasized the need for continued support, especially for small and micro enterprises, which remain below the 50% threshold in PMI and continue to face operational challenges. Addressing these issues is crucial for maintaining long-term economic stability.
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