Manufacturing activity surges in October at its quickest pace in four months

China’s Caixin PMI Climbed Marginally in October

Output charges were raised in response, and to the greatest extent in six months, but weak demand restricted the overall rate of increase to only a slight pace.

The latest IHS Markit Purchasing Managers Index (PMI) was conducted from 12-26 October, just before the UK Chancellor announced a positive but Brexit deal-dependent Budget, and came in at 51.1, showing a decline in new orders and employment for the first time since the Brexit vote in July 2016.

A sub-index showed total new orders increased at a faster pace, though growth in export orders moderated slightly.

It marked the first time that back-to-back declines have been recorded since 2013. Sta ing levels rose at SMEs, but fell for the third straight month at large-sized companies.

The indexes of both the finished goods and input prices expanded at lower rates, and the order backlog index reverted to a contraction.

"China's economy has not seen any obvious improvement", said Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group, in a note accompanying the survey.

It could have a "negative impact" on fourth-quarter growth, they said.

A PMI of more than 50 points represents expansion in the manufacturing sector, and below that, contraction.

"Manufacturers are at the sharp end of the slowdown in global trade and the increasing reluctance of European customers to source components for Britain, given the risk that supply chains might fail in the event of a no-deal Brexit", says Samuel Tombs, chief United Kingdom economist at Pantheon Macroeconomics. Anecdotal evidence pointed to transport shortages across North America and shipping delays at ports following typhoons in Asia.

"The key area of concern remained tariffs, which were widely reported to have contributed to another month of stalled export sales and a steep rise in prices for many inputs".

"Despite this, the Irish manufacturing sector showed signs of resilience with solid growth of employment and purchasing activity", he said. "However, the rate of selling price inflation was mild, in the context of historical survey data", the survey noted. October also marks the first month new orders have dropped below 60 since April 2017's 57.1 reading.

The monthly index rose from 52.2 in September to 53.1 in October. IHS Markit has more than 50,000 business and government customers, including 80 percent of the Fortune Global 500 and the world's leading financial institutions.IHS Markit is a registered trademark of IHS Markit Ltd. and/or its affiliates. "Until firms have more clarity about what a future relationship with the European Union looks like, investment levels are likely to continue to flatline and confidence will remain low", she said.



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