China’s Manufacturing Activity Grows at Fastest Rate Since January 2011
Factory activity across China grew at the fastest rate in almost 10 years during the month of October, spurred by a rise in domestic demand, and supporting China’s economic recovery in the wake of the coronavirus pandemic. The Caixin/Markit Manufacturing PMI picked up to 53.6 in October from 53 in September, staying above the 50-threshold indicating expansion in the sector for the sixth straight month.
The manufacturing PMI reading not only beat economists’ expectations, which was for the figure to remain unchanged at 53, but was also the highest reading seen since January 2011. The PMI figure indicates that China’s manufacturing sector is rebounding towards pre-pandemic levels of activity even though most countries around the world are still reeling under the impact of the pandemic, especially the more recent and ongoing second wave.
The growth in the manufacturing sector activity was driven by pent-up demand among domestic consumers as well as the government’s stimulus measures, even as exports continue to pick up. Domestic consumption, which remained under pressure, even after China resumed economic activity, is slowly recovering into Q3 2020.
Total new orders received by manufacturers rose to the highest level in a decade, although the growth in new export orders saw a slight decrease since September. In addition, hiring activity across factories also continued to rise for the second consecutive month, while business confidence surged to the highest levels seen in several years.
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