China’s Caixin Manufacturing PMI improved to 53.6 in October from 53.0 in September, with a sharp increases in production and new orders boosted the country’s economy. Business confidence rose to a six-year high, despite lower export sales due to a rise in COVID-19 cases globally. Almost a-third of manufacturers surveyed believe businesses would improve in the next 12 months.
The PMI level is at its highest since January 2011 and indicates significant improvement in economic activities. China’s manufacturing sector has improved every month since May. Total new work rose in October, but new exports growth slowed. A second wave of COVID-19 infections in Europe and a third wave in the US has significantly reduced demand for Chinese goods in the overseas market.
Manufacturers expanded production in October amid higher overall workload with increased inflows of new work. The survey data indicates pressure on capacities and higher rate of backlog (work-in-hand) which remains nearly unchanged from September. Manufacturers increased buying activity to sustain higher operational rates. Raw material inventory at manufacturers rose in October, while finished products stock reduced.
In October, finished goods prices remained stable as average input costs increased at a slower rate. Input cost rise was mainly due to an uptick in raw material prices. Companies partially offset cost increased by raising prices and expect rising demand could support a prices hike in the coming days.
Manufacturers expect global economies to recover over the next year as the impact of the pandemic subsides.