China's Caixin manufacturing PMI holds steady in October

A worker assembles an automobile at Chinese automaker Geely Cixi Manufacture Base in Cixi, east China’s Zhejiang Province. [File Photo: AP]

Manufacturing activity at smaller Chinese enterprises maintained steady expansion last month, a private survey showed on Wednesday.

The Caixin China General Manufacturing Purchase Managers' Index (PMI) stood at 51 for October, unchanged from the September level, according to the survey conducted by financial information service provider Markit and sponsored by Caixin Media Co. Ltd.

A reading above 50 indicates expansion, while a reading below reflects contraction.

This is the fifth month for the Caixin manufacturing PMI to stay in expansionary territory, and it gives a more optimistic picture of small firms after an official survey showed slight moderation in manufacturing expansion last month.

The official manufacturing PMI came in at 51.6, moderating from 52.4 in September and 51.7 in August as growth in production and market demand eased, according to the National Bureau of Statistics.

The official PMI samples 3,000 manufacturing enterprises in China, while the Caixin survey samples some 500 manufacturers in China and mainly focuses on small and medium-sized firms.

"October survey data signaled a further marginal improvement in manufacturing operating conditions across China," Caixin said in the survey report.

The growth in new orders picked up, while production increased slightly in October, according to the report.

However, strict government environmental regulation contributed to a sharp rise in input costs and weighed on vendor performance. As a result, companies raised their factory gate prices at a solid pace, said Caixin.

Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group, a subsidiary of Caixin Insight Group, said the strict government environmental policies and relatively low inventory levels have added to cost pressures on companies in midstream and downstream industries.

This could have a negative impact on production in the coming months, Zhong warned.

China's GDP expanded 6.9 percent year on year in the first three quarters, holding steady with the 6.9-percent growth in the first half despite a slightly slower 6.8-percent increase in the third quarter.