Factory index drops to lowest in 2 years

Ivan Schwartz
November 3, 2018

Business investment growth remains lacklustre while worldwide trade is assumed to make no contribution to growth over coming years given the OBR expects a reduction in "trade intensity" after Brexit day in March 2019.

The manufacturing sector is directly affected by the tariffs Washington placed on US$ 250 billion of Chinese imports.

"Latest PMI data suggests the worst of the current difficulties may have been seen in September, with key indicators such as output, new orders and employment all moderating at weaker rates in October amid a slowdown in inflation".

"All the numbers from China's PMI release confirm a broad-based decline in economic activity", ANZ's Raymond Yeung said in a note.

China's manufacturing PMI was 50.2 percent this month, down 0.6 percent over last month, while the non-manufacturing business activity index was 53.9 percent in a drop of 1.0 percent, China's statistics bureau announced on its official website today.

According to the survey, detrimental exchange rate movements, rising raw material prices, and the sales and service tax (SST) were all cited as sources of cost pressures in October.

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She also described a time when got distracted on the road, and turned her auto onto a highway on-ramp. The pair belted out some of her famous songs and shared a lot of laughs along the way.

The industry moved up a gear in October, with growth of production, headcounts and input purchasing all gathering pace on the back of a robust and accelerated increase in new work.

This is the lowest level since December 2014.

The Bank of England has raised interest rates twice, taking bank rate to 0.75%, since November 2017 citing above-target inflation and the prospect of an inflationary pickup in United Kingdom wage growth over the coming year.

While the reading signalled a solid improvement in the health of the sector, it was at the weakest seen for seven months. The sub-index fell to 46.9 from 48.0 in September. A reading above 50 on the index denotes expansion, while a reading below that reflects contraction. Fiore noted in the report that this indicates supply chains are having issues in keeping pace with production demand, adding that as lead times continue to extend, supply chain labor issues continue to restrict performance and transportation issues continue to limit supplier execution.

The IHS Markit US Manufacturing PMI™ is compiled by IHS Markit from responses to questionnaires sent to purchasing managers in a panel of around 800 manufacturers. Production and business confidence continued to cool despite stable demand.

Analysts attributed the low PMI to slower economic expansion and the escalating US-China trade disputes and said if the situation continued to worsen, the authorities may ramp up stimulus measures to keep the economy on track. The region accounts for around 60 percent of global growth. Any unauthorised use, including but not limited to copying, distributing, transmitting or otherwise of any data appearing is not permitted without IHS Markit's prior consent.

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