Chinese Manufacturing index dropped in October

A Chinese manufacturing index dropped to the lowest level since last two and half years because of global slowdown and tight monetary policy. The Purchasing Managers- index which is a widely used parameter to check manufacturing activity dropped to 50.4 in October compared to 51.2 in September. Any reading lower than 50 indicates contraction.

The drop in manufacturing activity was mainly due to lower demand of Chinese products because of global slowdown and current euro zone debt crisis. Also the tight monetary policy to tame continuously increasing inflation is hurting the manufacturing sector as well. The data also shows the coming quarters will be tough for the second biggest economy in the world amid the fear of another recession.

Another separate manufacturing index published one week back indicated rebounds in the manufacturing sector with index rising to 51.1 in October compared to 49.9 in September. Both the methods use different sample size and methodologies, thus leading to different results.

Another Index: Chinese Manufacturing activity rebounds in October