Thought for the day

China October Sales Indexes & Business Confidence Stays Up Despite Continuing Problems in the Manufacturing Sector


 
Last updated: 3 July 2024
 
Largely unreported Covid related supply problems still hamper recovery in the Manufacturing sector but the percentage of companies reporting they are still affected in one way or another (36.6%) has fallen sharply from the 55% recorded early in 2023.

The Manufacturing survey results continue to suggest that the sector is at best flat-lining. The Sales Managers Manufacturing Index remains below the 50 "no growth" line, although Business Confidence in the sector remains reasonably robust.

China All-Sector: Business Confidence Index
Diffusion Index. (50 = 'No Growth')
China October Sales Indexes & Business Confidence Stays Up Despite Continuing Problems in the Manufacturing Sector

The Services sector results, in contrast, are significantly more positive, with the overall Services Sector Index up again in the month, now standing at a 5 month high.

Perhaps most important of the September results are the Price Index numbers. The Manufacturing Sales Managers Price Index still registered numbers below 50, although in October the Index rose to a 15 month high at 49.0, indicating modest price falls over the month. But in the Services sector, a more positive story is emerging, with the Services Price Index registering 51.6. The All Sector Price Index recorded a figure of 50.6, suggesting fears of Chinese price deflation ushering in a Japanese style period of very low or negative growth have been overblown.

Given the shrinking prospects for global growth in a world grown more suspicious of international trade, and increasingly fettered by sanctions of one kind or another, predictions of GDP growth are of diminishing value.
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