Business confidence in China remains lacklustre in October
Staff Writer |
The IHS Markit Business Outlook survey indicates that optimism among Chinese companies held close to a record low in October.
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Latest data signals subdued levels of confidence across both the manufacturing and service sectors towards future business activity, new orders and business revenues.
At the same time, companies revised down their hiring plans, while forecasting stronger cost pressures.
Expectations around business activity appear relatively muted across China, with a net balance of +19% of companies forecasting growth.
This is up only slightly from the previous survey period (+18%), and among the lowest seen in eight years of data collection.
Companies see new products, improving domestic economic conditions and state policy support as opportunities for growth over the coming year.
On the other hand, a number of firms note that tough competition, rising input costs and amendments to national policies could all weigh on economic performance.
There are also a number of reports suggesting that stricter environmental policies could dampen growth.
In line with expectations for activity, Chinese companies foresee a relatively subdued increase in new orders over the next year.
Furthermore, the degree of optimism towards new business prospects held close to the record low seen in June 2016.
Chinese employment is set to rise only slightly over the next 12 months.
Furthermore, the level of sentiment regarding job hiring is at its weakest for a year and the lowest seen of all surveyed countries.
In contrast, companies made a slight upward revision to their capex plans in October, though the net balance of companies forecasting higher expenditure remains below the series average.
Input prices faced by Chinese firms are anticipated to rise further over the coming year.
Both manufacturers and service providers foresee a stronger increase in cost burdens than in the previous survey period, with the former expecting a steeper pace of inflation.
Projections of greater input costs are widely attributed to rising raw material prices for items such as steel and fuel, alongside increasing staff costs.
Reflective of higher cost burdens, companies generally expect to increase their output charges over the year ahead.
That said, the rate of increase looks set to remain weaker than that for input costs. ■