China: PMI drops to lowest level in more than two years
November 1, 2011
The Purchasing Managers' Index (PMI) published by the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing (CFPL) fell to 50.4 points in October, which was below the 51.2 points recorded in September and contrasted market expectations that had the index rising to 51.8 points. The October print marked the lowest reading since February 2009 and moved the index closer to the 50-point threshold that separates expansion from contraction. The decline observed in October was broad-based as 9 out of the 11 sub-categories of the index recorded losses over the previous month, particularly the sub-index of input prices, which dropped by 10.4 points to 46.2 points suggesting that inflationary pressures may have eased. The sub-gauge of export orders declined 0.8 points, which reflected the cloudy outlook for global demand. In addition, production output, which accounts for a quarter of the total PMI, slipped by 0.4 points compared with the previous month. Analysts are not too concerned about the October downturn and highlight that China is in the midst of a moderate slowdown, but not a hard landing. In addition, the weaker manufacturing activity was also the result of seasonal distortions.