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Manufacturing Gauge Cites Smaller Factories in China are witnessing some Relief

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Published on : Nov 02, 2015

Factory activities across China plummeted at a slower pace throughout the country in October, as reported by a private-sector firm, indicating that stimulus measures by Beijing might be having an impact. 

The latest market figures, released on Monday, paints what some may say a partially positive picture for manufacturing sector in China after months of slowdown. Whilst, an official gauge of the manufacturing sector run by government released over this weekend, a weaker than expected, but Monday’s readings indicate some of the smaller and medium-sized factories may have been witnessing some relief. 

The manufacturing purchasing index called Caixin China, which is a nationwide gauge of manufacturing activities, rose to 48.3 in October, compared to 47.2 in September. The data was released by Caixin Media Co. on Monday. The readings published suggest that the shrinkage witnessed by the factories may be slowing, although it also market contraction for the eighth straight month. Hence, a reading that strikes below 50 always suggest a contraction in manufacturing activity than the previous month. Likewise a reading above 50 will indicate expansion of activities. 

The Chinese economy however, is glad to see the slight upswing, which clearly suggests that overall weakening of the country’s manufacturing sector has slowed down, which in turn indicates the stimulus strategies adopted by the country has begun to exhibit their effects. 

Faced with low demand at native and international markets, the factories in China are saddled with overcapacity and forced to bring down prices. The deflationary trend has been lingering on the producer-price index for the past 43 months. 

According to reports, the China economy grew only by 6.9% as compared to its previous year in the third quarter, which is the slowest pace of growth exhibited by the country since the global economic crisis. However, a group of economists are of the opinion that growth might be much weaker than the figures released by the government.