China's factory activity marks third contraction in four months
SPY•China's official manufacturing PMI fell to 49.3 in October from 50.1 in September, below the 50.0 forecast, while the non-manufacturing PMI declined to 49.7 from 50.2. New orders and export orders remained in contraction territory.
1. Factory activity contracts
China's factory activity unexpectedly contracted for the third time in four months in October, with soft demand for exports and domestic goods weighing on the survey. Production and purchasing activity also slipped into contraction, while new orders and new export orders remained below the expansion threshold.
2. Uneven sector performance
Railway, shipbuilding, aerospace equipment, and computer, communications and electronics manufacturing recorded production and new orders sub-indexes at or above 53.0. AI-related firms reported strong earnings growth: Zhongji Innolight's third-quarter net profit nearly tripled, while furniture maker Oppein Home's net profit fell 80%. China's economy is expected to meet its 4.5%-5.0% annual growth target without additional stimulus, after third-quarter growth rebounded to 4.5% from 4.3% in April-June.
