The HSBC/Markit China manufacturing PMI flash estimate for October improved from 47.9 to 49.1, the highest reading in three months. The headline PMI has been in contractionary territory (i.e. sub-50) for a whole year.
There are noticeable improvements in various components, although some key sub-indices remain below 50. Both new orders and new export orders are improving, albeit remain below 50. Meanwhile, finished goods inventory has fallen below 50 for the first time in 6 months, brining the new orders minus inventory measure back in positive for the first time in 6 months. Employment remains unchanged and below 50, while input and output prices rises above 50 for the first time in 6 months.
Improvements can be seen across sub-indices in October. Since most readings remain below 50, however, the improvements merely reflect a slowing pace of contraction in manufacturing, although the new orders minus inventory measure portrays a somewhat more positive picture. However, this time of the year is normally the season for Christmas orders, the fact that new export orders index remains well below 50 is not particularly confidence inspiring, suggests that export outlook for the remainder of the year will remain difficult.