In October, the PMI of Caixin China's service industry dropped to 51.1

The October Caixin China general service industry business activity index (service industry PMI) released on November 5 recorded 51.1, down 0.2 percentage points from September, the same as February this year, the lowest since November 2018, indicating that the expansion of service industry business activity slowed down.

The previously announced manufacturing PMI of Caixin China rose 0.3 percentage points to 51.7 in October, which led to a slight increase of 0.1 percentage point to 52, the highest since May. The trend of service industry PMI and comprehensive PMI of Caixin China is not completely consistent with that of the Bureau of statistics. The business activity index of the service industry in October released by the National Bureau of statistics is lower than 1.6 percentage points in September, which is 51.4; the comprehensive PMI is down 1.1 percentage points to 52. In October, the new orders index of service industry dropped to the lowest level since February this year. According to the interviewed service enterprises, the recent growth of new orders is mainly driven by the stronger customer demand and the release of new products. The index of new manufacturing orders rose sharply, the highest since February 2013.

Overall, the total volume of comprehensive new orders continued to expand in October, and the growth rate remained at the 19 month high set in September. Among them, the index of new export orders of the two major industries has improved, pulling the total amount of comprehensive new export orders in October to end the previous two consecutive months of decline, showing a small increase. Although orders improved, employment continued to be under pressure in October. The employment index of manufacturing enterprises dropped significantly within the contraction range, and the employment index of service industry dropped to the lowest level in three months. In October, the comprehensive employment index fell again below the boom and bust line. In October, the input price index of service industry decreased slightly in the expansion range, but the price increase was still significant.

According to the manufacturers interviewed, the rising cost is mainly related to the rising prices of raw materials, diesel and other fuels and labor. Manufacturing input costs also rose slightly. Driven by the two industries, the average input cost of enterprises continued to rise in October. Although the cost has accelerated to rise, the service charge price index has declined slightly in the expansion range, and enterprises have only slightly increased the charge price. Under the pressure of market competition, the factory price of manufacturers has declined slightly. Combined with the two, the comprehensive pricing rose slightly in October. Driven by the six-month high of manufacturing industry optimism, enterprises' confidence in the production and operation prospect in the next 12 months improved in October, but it is still at a low level in history. Among them, the service industry's optimism fell to a 15 month low due to the slowdown in business activities and new order growth. Zhong Zhengsheng, chairman and chief economist of moneta research, a financial think tank, said that China's economy continued to recover in October, mainly driven by the manufacturing industry. However, corporate confidence was still weak, which restricted the release of production capacity. Structural unemployment and rising cost of raw materials were still prominent, and the foundation for economic stability remained to be consolidated.