The Caixin China General Manufacturing PMI for October 2024 showed encouraging signs for the manufacturing sector, rising to 50.3 from September’s 49.3. This increase not only exceeded market expectations of 49.7 but also indicates a welcome shift towards expansion in factory activity. This positive momentum follows a series of stimulus measures implemented by Beijing in late September, aimed at revitalizing the economy.

Growth in Output and New Orders

The increase in the PMI was largely driven by a surge in output, which grew at its fastest pace in four months. This growth can be attributed to a renewed rise in new orders and heightened purchasing activity among manufacturers. Despite this progress, export orders continued to decline, although at a slower rate, highlighting ongoing challenges in international markets.

Employment Challenges and Rising Costs

While the sector saw improvements in output, employment faced significant challenges, shrinking at the fastest rate in nearly a year and a half. This reduction in workforce capacity contributed to a backlog of unfinished work. Additionally, input costs rose after two months of decline, leading to higher selling prices for manufacturers for the first time since June. However, export prices fell due to intensified competition in global markets.

Boost in Manufacturer Confidence

Despite the mixed signals, confidence among manufacturers reached a five-month high, reflecting optimism about future business conditions. Although freight costs decreased for some exports, lead times lengthened, indicating ongoing complexities in the supply chain. Overall, the October PMI data paints a nuanced picture of the manufacturing landscape in China, balancing growth with persistent challenges.