Goldman Sachs: China’s private manufacturing PMI edges down in October as export orders and margins come under pressure

How did manufacturing conditions change?

The RatingDog China Manufacturing PMI was 52.0 in October, edging down from 52.1 in September. It matched the Bloomberg consensus and exceeded Goldman Sachs’ forecast of 51.7.
The components showed mixed performance: the employment index fell from 50.5 to 50.2, the main reason for the decline in the headline index; the new orders index edged down from 53.4 to 53.3, while the output index rose slightly from 53.6 to 53.7.
Goldman Sachs noted that the National Bureau of Statistics manufacturing PMI fell more sharply than the private PMI in October, partly reflecting residual seasonality at the end of the quarter.

The new export orders index fell from 53.8 in September to 51.8 in October, a larger decline than that of the overall new orders index.
The raw materials inventory index rose from 50.9 to 51.7, while the finished goods inventory index fell from 51.0 to 50.1; the two inventory measures moved in opposite directions.
The supplier delivery times index rose from 49.7 to 50.6, its highest since February of that year. Surveyed companies attributed the improvement in deliveries to greater supplier efficiency and more abundant supply of goods.

The input price index fell to 52.3 in October from 54.1 in September, while the output price index fell from 50.5 to 49.6. Surveyed companies said intense competition, together with slower growth in input costs, enabled them to lower selling prices to support sales.
According to S&P Global’s survey commentary, rising raw material prices, particularly for metals and oil, increased costs. Goldman Sachs noted that price indices fell in both surveys, but the input price index remained well above the output price index, indicating continued pressure on margins.