RatingDog manufacturing PMI holds at 52.0 as output hits a six-month high

China's two factory surveys are telling different stories again. The RatingDog manufacturing PMI, compiled by S&P Global, registered 52.0 in October, little changed from 52.1 in September and comfortably above the 50 line that separates growth from contraction.

What happened

The release, published at 01:45 UTC on November 2, said the index has now stayed above 50 for 11 straight months, the longest run of improving conditions since mid-2021. FXStreet listed the expected reading at 51.6, while MNI said the figure matched estimates, so the size of any surprise depends on which consensus one uses.

Output rose at the sharpest rate since April, helped by new product launches, better production capacity and firms' own sales efforts. Total new orders increased for a 17th consecutive month. New export orders grew for a fourth month, though at a modest pace and a three-month low, with clients in Asia, Europe and Africa cited.

Prices moved the other way. Output charges fell for the second time in three months as intense competition pushed firms to discount, and prices charged to export customers fell for the first time in almost a year. Input costs rose for a 16th month on metals and fuel but at a slower pace. Hiring rose only marginally, backlogs grew for a ninth month and business confidence eased to a nine-month low.

Why it matters

The contrast with the official data is stark. The statistics bureau's gauge, which our China manufacturing PMI report covered on Saturday, fell to 49.3, a contraction. The two gauges use different panels; S&P Global's methodology note says the private survey polls around 650 manufacturers, so the gap hints at an uneven economy rather than a clear turn either way.

Falling selling prices are the warning sign. Discounting to win orders squeezes margins and feeds the deflation concerns that have hung over China all year; our China third-quarter GDP story showed growth leaning on exports while domestic demand stayed soft.

Yao Yu, founder of RatingDog, said cost pressures, price competition and subdued confidence warrant attention, but expects the index to remain in expansion in the near term.

FXStreet reported that the New Zealand dollar weakened after the release, a sign that currency traders read the details as less upbeat than the headline.

Because the RatingDog manufacturing PMI held at 52.0, the headline signals steady expansion rather than acceleration, even with output growing at its fastest pace since April.

What's next

The services and composite surveys follow later this week, and October trade data will test the export-order signal. The S&P Global release has the full sub-index commentary.

If the RatingDog manufacturing PMI keeps holding above 52 while the official gauge sits below 50, debate over how much stimulus Beijing needs will only sharpen.

Survey data were collected from October 12 to 22, before the latest round of global tech-stock selling.