Published: Sat, November 03, 2018
Business | By Tara Barton

PMI manufacturing index down to 4-yr low - English

PMI manufacturing index down to 4-yr low - English

The IHS Markit/CIPS UK Manufacturing PMI, slumped from 53.6 in September to 51.1 in October, its lowest since July 2016.

China's Caixin PMI for October managed to hold above the expected contraction to 49.9, clocking in at 50.1 versus the previous reading of 50.0, but broader manufacturing PMIs from China are showing rising threats of contraction.

This is the lowest level since the month following the Brexit referendum vote in June 2016.

The figure was also below the 50.6 reading tipped in a Bloomberg News survey of economists, though above the 50-point mark that separates expansion from contraction.

China's official manufacturing PMI, released by the National Bureau of Statistics on Wednesday, dipped to 50.2 in October from 50.8 in the month before.

Markit reported that foreign demand decreased for the second time in the past three months, with some companies reporting that Brexit uncertainties had negatively impacted inflows of new work from within the EU.

"Further worrying news saw construction companies' confidence about output prospects for the next 12 months weaken to the lowest level for almost six years".

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China's manufacturing sector has been squeezed by a reduction in sources of credit amid Beijing's multi-year crackdown on corporate debt and risky lending practices, with smaller firms especially under strain.

Prices data signaled another squeeze on operating margins as input costs continued to rise at a faster rate than output charges.

The PMI for large firms was 51.6 percent, down 0.5 percent on the month, but still 1.4 percent higher than manufacturing PMI, so the steady operations of large firms are the main prop of manufacturing growth.

Higher cost burdens led firms to raise selling prices last month, although the rate of increase was the mildest in 14 months, it said.

Finally, output expectations towards the coming 12 months improved, with firms suggesting that anticipations of further new order growth drove optimism.

"The 25 per cent tariff rate will be activated in January. maybe the weakening of new export orders in the PMI is a warning sign of what's to come even though it hasn't been reflected yet in the hard data", said Julian Evans-Pritchard, Senior China Economist at Capital Economics.

"The survey responses were gathered before this week's budget, which provided a welcome boost for manufacturers". IHS Markit has more than 50,000 business and government customers, including 80 percent of the Fortune Global 500 and the world's leading financial institutions.IHS Markit is a registered trademark of IHS Markit Ltd. and/or its affiliates.

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