China’s Manufacturing Sector and a Private Survey

China has the second-largest economy in the world, and this fact once more underlines the importance of the local economy. Unfortunately, the coronavirus, which emerged in the Chinese city of Wuhan created a lot of problems for the local as well as the global economy. People should take into account that the pandemic is far from being over. However, the country’s government was able to contain the virus. Let’s have a look at the Caixin/Markit Purchasing Managers’ index for Chinese manufacturing to learn more about the situation.

According to a private survey, China’s factory expanded for the sixth month in a row in October. Thanks to this, the business confidence grew to its strongest in years. It is worth noting that, the Caixin/Markit Purchasing Managers’ index for Chinese manufacturing came in at 53.6 for October. Importantly, the latest reading was the highest since January 2011.

People should keep in mind that, PMI readings above 50 indicate expansion, while the result below 50 signal a contraction. Interestingly, PMI readings are sequential and indicate month-on-month expansion or contraction.

It is worth mentioning that, China’s vast manufacturing industry continues to recover as the country’s coronavirus outbreak appears largely under control. Notably, the October Caixin/Markit PMI showed that China’s manufacturing activity has continued to pick up speed, and it once more underlines the strength of the local economy.

The economy of China and risk factors

Interestingly, the private survey followed the release of China’s official manufacturing PMI over the weekend, which came in at 51.4 for October. According to the official data, the manufacturing PMI expanded for the eight-month in a row in October.

People should remember that the official PMI survey typically polls a large proportion of big businesses as well as state-owned enterprises. However, the private Caixin/Markit survey features a bigger mix of small and medium-sized firms.

Based on the information taken from the Caixin/Markit Survey, both demand, and supply of Chinese manufacturing goods continued to recover from the damage caused by the pandemic.

Interestingly, the economic indicators for consumption, investment, and industrial output for September were generally better than expected. Importantly, it is highly likely that the economic recovery will continue for the next several months.

As stated above, China has the second-largest economy in the world. However, external uncertainties have the potential to affect the country’s economy. Unfortunately, renewed coronavirus outbreaks in Europe, as well as the U.S., represents a serious issue for the local economy.