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China's PMI hits 32-month low

(People's Daily)

16:25, November 04, 2011

Edited and translated by Yao Chun, People's Daily Online

Beijing, Nov.4 (People's Daily Online) --China's Purchasing Managers Index (PMI) dropped 0.8 percentage points month on month to 50.4 percent in October, according to the data released by the China Federation of Logistics and Purchasing on Oct. 3.

The index has continuously reflected economic expansion for 32 months, but it is evidently approaching the tipping point of 50 percent after dropping to the lowest point it has reached since March 2009. This has indicated that the economic downturn in the United States and Europe has already affected China's economy, and China's manufacturing sector is still expanding with an evident decline in the pace.

Out of the five sub-indexes of PMI in October, all fell except for a rise in the suppliers' delivery index.

The production index stood at 52.3 percent, 0.4 percentage points lower than a month earlier or 2.9 percentage points lower than the average level of the same period in history. However, the index is still in positive territory, meaning that the output of the manufacturing sector is still on the rise with a decline in the pace of expansion. Survey results show that about a quarter of enterprises said their output was lower than that of a month earlier.

The new orders sub-index dropped 0.8 percentage points from September to 50.5 percent, its lowest level since March 2009 but still above the 50 percent threshold. This signifies sluggish market demand and slight growth in the number of new orders in the manufacturing industry.

It is worth noting that the new orders sub-index among small manufacturers rose to 49.8 percent in October, up 5.8 percentage points from the previous month. This shows a slower decline in the number of new orders for small manufacturers, and an improved situation for them.

The raw material inventory sub-index dropped 0.5 percentage points to 48.5 percent in October and has been below the 50 percent threshold for six consecutive months. This shows a slowdown in domestic manufacturers’ output growth and procurement activities as well as a continued drop in the inventory of raw materials.

The employment sub-index dropped 1.3 percentage points from September to 49.7 percent, which is below its historical average and the 50 percent threshold. This also shows a slowdown in domestic manufacturers’ output growth and a reduction in their labor demand amid murky market outlook.

The Supplier Delivery Time Index was 50.7 percent, up 1.2 percentage points compared to that of September. It was the highest since September 2010, indicating that, in the manufacturing industry, the raw material suppliers' delivery speed during October was more rapid than that of September.

The purchasing Price Index of Raw Material was 46.2 percent, down 10.4 percentage points compared to that of September, indicating that as European and U.S. economic growth continues to slow, the prices of international bulk commodities are also declining.

It also indicates that as a series of policies and measures to stabilize prices are being implemented in China, the inflation pressure of the manufacturing industry is weakening and the momentum of rapid price increases has already been fundamentally contained. From the trend of the index of recent years, it could be seen that the index fluctuated fiercely and was lower than the critical point only in the period between September 2008 and March 2009. In all other months, it was higher than 50 percent.

 
 
     
 
 
 
     
 
 
 
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