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Factory activity among smaller Chinese firms stagnated in October with almost no change in data readings from the previous month. However, the number was better-than-expected compared to the bearish forecast from analysts towards a manufacturing sector caught in the crosshairs of the United States (US)-China trade war.
The Caixin/Markit Manufacturing purchasing managers’ index (PMI) for October was at 50.1 points, edging up slightly compared to 50.0 points in September. Economists in a Reuters poll had expected the sector to fall below the 50-mark that separates expansion and contraction, at a contractionary reading of 49.9 points.
For last month, factory output fell for the second straight month but stayed above 50.0 points. New export orders improved to 48.8 points from 47.6 points the previous month but remained in contractionary mode.
Official PMI numbers released on Wednesday showed China’s manufacturing sector growing in the weakest pace in over two years in October, falling below analysts’ expectations.
The slower factory pace has been attributed to the ongoing US-China tariff war, as some US tariffs went into effect in October.
The soft factory numbers translate to slower economic growth for the manufacturing-dependent nation. For the third quarter, China’s economy grew the weakest pace since the first quarter of 2009.
Just weeks ago, the International Monetary Fund said that the trade war escalation between the duo is likely to hit China harder than the US, and shaved the growth prediction for China next year to 6.2%, which will make it the slowest annual growth rate since 1990.
The Chinese Yuan was at ¥6.97 against the greenback on Thursday morning.