The October manufacturing Purchasing Manager's Index (PMI) survey from IHS/Market came in below expectations with a fall of 2.5 points, one of the steepest falls seen in the index over the past five years.
Low stocks and longer delivery times among suppliers encouraged raw materials inventory building across the manufacturing sector during October. That said, the overall level of positive sentiment fell in October and was below the series average.
But the rate of payroll reduction in the manufacturing sector slowed from September, according to the Caixin survey, which focuses more on small and medium-sized companies which are vital to China's job creation.
"Optimism was at its lowest level for six years, as the sector remained stifled by client hesitation, fears about the health of the United Kingdom economy and continued Brexit uncertainty, resulting in slower growth of new orders and purchasing". Not only did employment expand for the thirty-first month running, but it also showed the strongest growth since July.
EEF economist Francesco Arcangeli commented: "It appears that reality abruptly kicked in October with today's manufacturing PMI illustrating that manufacturing activity slowed sharply, ahead of the Bank of England's MPC decision later today". The subindex measuring production and operations prospects was 56.4, unchanged from the previous month.
The consumer goods sector was the hardest hit, while investment and intermediate goods both grew a little.
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ISM reported that 13 of the 18 manufacturing sectors reported growth in August, including: Textile Mills; Electrical Equipment, Appliances & Components; Apparel, Leather & Allied Products; Plastics & Rubber Products; Food, Beverage & Tobacco Products; Computer & Electronic Products; Furniture & Related Products; Miscellaneous Manufacturing; Machinery; Transportation Equipment; Printing & Related Support Activities; Chemical Products; and Paper Products. Many analysts have attributed the increase largely to front-loading of shipments done by firms to dodge stiffer USA duties.
Taiwanese companies generally reported slack demand from customers at home and overseas, and were negative about the rest of the year amid concern that the US-China trade dispute would affect their performance, Fiddes said, adding that output levels are unlikely to improve in the near term as purchasing activity slows.
The weakness in total new orders was mainly centred on the consumer goods sector.
For further information on the PMI survey methodology, please contact email@example.com. Production and business confidence continued to cool despite stable demand. The region accounts for around 60 percent of global growth.
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