China's manufacturing sector is barely growing in October, expansion orders are slowing down: Caixin PMI

BEIJING (Reuters) – China's industrial sector barely grew in the month after stall in September, while an expanded contraction in export orders marked increased pressure on the economy when a trade war with the US intensified.

Caixin / Markit Manufacturing Purchasing Managers Index (PMI) for October published on Thursday, edged up to 50.1 from 50.0 in September. Economists polled by Reuters had expected a reading of 49.9, just outside the 50 degree that shares expansion from contraction.

The fairly thorough growth last year was in line with an official PMI survey released on Wednesday, showing that China's manufacturing sector expanded at its weakest pace for over two years.

Brittany in the major manufacturing sector, a major domestic and global driving force for growth, supports expectations for further stimulus support from Beijing as it tries to prevent a sharp decline for the economy. The Chinese and American trade councils, and the risk from the conflict to the Chinese and global economies, have recently rattled the financial markets.

The Caixin survey showed that manufacturing output fell for the second straight month, and was only broken down by the neutral 50.0 level, including weaker demand at home and abroad. It ran business confidence among the manufacturers for an 11 month low.

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

"The expansion across industry was still weak. Manufacturing and industry confidence continued to cool despite stable demand The pressure on production costs did not make it easy."

While new export orders – an indicator of future activity – improved to 48.8 from 47.6 in September, they became extinct in the contraction phase of the seventh consecutive month as a trade war with the United States States.

October was the first full month after the latest US tariffs came into force.

Washington and Beijing beat additional tariffs on each other's goods on September 24, and US President Donald Trump has threatened to hit China with several duties.

External pressure is already beginning to push activity in large parts of China's economy, which grew at its weakest pace since the global financial crisis in the third quarter. Analysts say that business conditions will get worse before they get better.

The overall index for total new orders – domestic and foreign – rose slightly to 50.4 from 50.1 in September.

The investigation also showed that the pressure of pressure remains high for Chinese producers, due to higher costs for raw materials such as steel. It could put additional pressure on profit margins and risk wiping out a vicious circle of lower business investment, job loss and deeper gloom for the broader economy.

China's manufacturing sector has been pushed by a reduction in source of credit among Beijing's multi-year corporate debt crash and risky lending practices, unless businesses are particularly under stress.

Politicians have taken a number of measures to reduce the risk of growth, including injecting more liquidity, reducing funding costs, reducing taxes and fees and pledging more support for private businesses.

Due to higher costs and weak demand, Chinese manufacturers have reduced staff levels for about five years.

The aerospace research and manufacturing sector continued to be the poorest sector in the third quarter, according to a work index report published jointly by the China Institute for Employment Research and a leading Chinese career platform Zhaopin.

"The trade / import and export sector continued to decline in the third quarter of 2018, reflecting the continuous impact of the US-China trade war," the report said.

However, the reduction in wage decline in the industrial sector declines from September, according to the Caixin survey, focusing more on small and medium-sized enterprises that are crucial to China's job creation.

Chinese officials have promised to prevent major losses at work.