China’s industrial PMI for October to be released

China’s National Bureau of Statistics (NBS) will release the October Purchasing Management Index (PMI) figures today.

The PMI measures the performance of the manufacturing sector based on surveys of large-scale state-owned companies. Figures above 50 represent an expansion in the manufacturing sector, while below 50 represents a contraction. Since May, the PMI figure has been increasing each month, indicating expansion. October’s PMI figure is expected to be 51.4, slightly below September’s 51.5.

A PMI that matches or exceeds the expected level would indicate that Chinese manufacturing is making a strong recovery from the COVID-19 pandemic. While many countries are contemplating a second round of lockdowns, the pandemic has propelled Chinese manufacturing’s rapid shift towards higher domestic consumption, the likely source for its PMI growth.

Expect “internal circulation”, or production for domestic consumption, to be high on the agenda of China’s 14th five-year plan, which will be released publicly early next year. A shift towards domestic consumption has been a long-term goal of the Chinese Communist Party, the legitimacy of which rests on continued economic development.