China manufacturing shows slowest expansion of output in five months

HONG KONG – The HSBC Flash China Manufacturing PMI has come in at 50.4 in October (50.2 in September), a three-month high, but the Manufacturing Output Index at 50.7 in October (51.3 in September) is at a five-month low. Output, new orders, new export orders and backlogs of work are all increasing, but at a slower rate, and supplier delivery times lengthening at a faster rate.

Commenting on the numbers,  Hongbin Qu, Chief Economist, China & Co- Head of Asian Economic Research at HSBC said both China domestic and external demand showed some signs of slowing, although both remained in expansion territory. Disinflationary pressures intensified, as both the input and output price indices declined further. Meanwhile both employment and inventory indices improved.

“While the manufacturing sector likely stabilised in October, the economy continues to show signs of insufficient effective demand. This warrants further policy easing and we expect more easing measures on both the monetary and fiscal fronts in the months ahead.” www.hsbc.com (ATI).