BEIJING, Oct 30 (Reuters) – China’s factory activity was likely flat in October from the previous month, as the manufacturing sector continued to move at two speeds, with advanced manufacturers racing ahead and legacy ones still under pressure.
The official manufacturing purchasing managers’ index (PMI) is expected to dip to 50 from 50.1 in September, according to the median forecast in a Reuters poll of 23 economists. A reading above 50 signals expansion, while one below 50 indicates contraction.
Results of the PMI survey, due to be released by the National Bureau of Statistics on Saturday, can provide an early, albeit partial, snapshot of China’s manufacturing strength in October after soaring exports and solid industrial output drove a rebound in growth in the third quarter.
The 4.5% GDP growth in the July-to-September quarter outstripped the 4.3% pace in the previous quarter and led analysts to expect that China could reach its full-year target of 4.5%-5.0% growth without resorting to additional stimulus.
Industrial profit growth also picked up in September, though the gap widened between advanced sectors, such as computer and electronic equipment manufacturing, which saw profits surge, and traditional sectors, such as furniture manufacturing, whose profits tumbled.
High-tech manufacturers, such as chipmakers, benefited from soaring product prices driven by the global AI boom, and from state support, with Beijing promoting tech self-reliance, while makers of domestic market-facing goods grappled with tepid demand and rising input costs.
Many households remain reluctant to spend money as the tech sector boom has not lifted their income. A years-long property market downturn, meanwhile, continues to weigh on homeowners’ wealth.
Economic data released earlier this month showed that retail sales, a gauge for consumption, continued to lag industrial output in September. Infrastructure investment shrank 4.2% in the first nine months.
Auto sales in China extended their declines for a 12th successive month in September, fuelling excessive competition at home and pushing automakers to seek markets overseas.
Policymakers have recently unveiled measures to steer cheaper credit into sectors including infrastructure and technology and allocated 550 billion yuan ($82.51 billion) in unused government debt quotas to ease local governments’ financial strain and expand infrastructure investment.
The National Development and Reform Commission, China’s economic planner, is drafting an implementation plan for the strategy to expand domestic demand for 2026-2030 and will accelerate efforts to issue and implement it, an official from the commission said earlier this month.
The private RatingDog manufacturing PMI, compiled by S&P Global, is due on November 2 and is forecast to dip to 51.6 from 52.1 in September, according to the Reuters poll.
($1 = 6.6660 Chinese yuan renminbi)
(Reporting by Yukun Zhang and Ryan Woo; Polling by Susobhan Sarkar in Bengaluru and Jing Wang in Shanghai; Editing by Sonali Paul)
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