Chinese factory activity expanded in October despite an ongoing trade change with the US, a survey of small and medium-sized enterprises in China showed.
On Thursday, Caixin and IHS Markit reported that the Purchasing Manager Index (PMI) was 50.1 in October and beat analysts' expectations. Analysts asked by Reuters had expected that reading had pushed something to 49.9 from 50.0 in September.
A reading of 50 indicates expansion while reading below that which signals contraction.
Despite the better than expected headline number and slight expansion in production activity in October showed a detailed reading of the survey softness in the Chinese economy. 1[ads1]9659003] The new index subindex improved from a two-year low in September but remained negative. New export sales fell in the seventh month.
" China's economy has not seen obvious improvement, "said Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group, a subsidiary of Caixin in a press release.
" Overall, there was expansion industry overheating remains weak. Production and industry confidence continued to cool despite stable demand The pressure on production costs did not make it easy, Zhong said.
On Wednesday, China reported the country's weakest production growth of more than two years.
Official production PMI was 50.2 in October – lower than 50.6 as analysts expected in a Reuters survey. The official PMI production was 50.8 in September.
China's official PMI target group focuses on large businesses and state-owned enterprises, while the private survey of Caixin and IHS focuses on small and medium-sized businesses.
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 24th.
Although October production data from China was positive, there will be more pressure from US tariffs in the coming months, said Wang Tao, head of China's economic research at UBS Investment Bank. Production PMI will probably fall below 50 in November and December, told Wang CNBC on Thursday.
"Q4 and Q1 next year will feel brown by the tax impact," she added.
China's economic data is carefully monitored during a trade war between the two economic giants.
Although financial data from China has kept up so far this year, even within the trade dispute with the United States, analysts said that many exporters rushed to ship products before US tariffs on the brand.
China already reported slower than expected growth of 6.5 percent in the third quarter of the year – the weakest pace since the first quarter of 2009.
Even before the rise in trade tensions with the US this year, Beijing already tried to maintain a decline in economy after three decades of breakneck growth.
The trade war with the United States is now complicating these efforts, with analysts expecting Beijing to increase political relief efforts to deal with threats from the bilateral conflict that can track growth.
On Wedn Esday, China's Powerful Politburo – the ruling Communist Party's supreme decision-making body – said the country will take more timely steps to support its economy, which is facing increasing pressure, reported Xinhua Xinhua News Agency.
– Reuters contributed to this report.