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China's factory growth likely cooled slightly in October: Reuters poll

·2-min read
FILE PHOTO: Woman work on manufacturing electric bicycles at a factory in Huaian, Jiangsu
FILE PHOTO: Woman work on manufacturing electric bicycles at a factory in Huaian, Jiangsu

BEIJING (Reuters) - China's factory activity likely expanded at a slightly slower pace in October, a Reuters poll showed on Thursday, as the economy extends a steady recovery from the coronavirus crisis.

The official manufacturing Purchasing Manager's Index (PMI) is expected to fall slightly to 51.3 in October from September's 51.5, according to the median forecast of 23 economists polled by Reuters. A reading above 50 indicates an expansion in activity on a monthly basis.

China's vast industrial sector is steadily returning to the levels seen before the pandemic paralysed huge swathes of the economy early this year, though the global outlook is dimming as many Western countries battle still rising COVID-19 infections and go back into virus lockdowns.

Profits at China's industrial firms rose for the fifth straight month in September, although they slipped from the previous month, official data showed on Tuesday.

Pent-up demand, stimulus-driven infrastructure and surprisingly resilient exports have propelled the manufacturing rebound. Consumption, although hit hard earlier in the year, has also recovered in the third quarter.

With a boost in overseas seasonal demand, China may continue to see significant export growth in the fourth quarter, said Zhu Xun, an analyst at Huatai Securities, in a note.

"China possess(es) the only supply chain that can fulfil the upcoming Christmas shopping season orders under the current conditions," said Zhu.

The economy grew a weaker-than-expected 4.9% in the third quarter year-on-year. It is expected to expand around 2% for the full year - the weakest in over three decades but still much stronger than other major economies.

The pandemic has been largely controlled in the world's second largest economy, although a local outbreak has emerged in the western region of Xinjiang.

The official PMI, which largely focuses on big and state-owned firms, and its sister survey on the services sector, will both be released on Oct. 31.

The private Caixin manufacturing PMI will be published on Nov. 2. The Caixin services PMI survey will be out on Nov. 4.

(Reporting by Gabriel Crossley; Editing by Kim Coghill)