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China’s Manufacturing Sector Slowed Down

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China’s October PMI

In October 2017, China’s manufacturing PMI (purchasing managers’ index) was 51.6, which was higher than Reuters’ forecast of 52. The PMI fell from 52.4 in September, which indicates a fall in manufacturing activity. The PMI shows a country’s economic health.

The production volume and output stood at 53.4 in October—compared to 54.7 in the previous month. In October, new order growth also softened and stood at 52.9—down from 54.8 in the previous month. Export orders also fell during the month. Employment in the manufacturing sector fell in October.

China’s PMI has been above 50 for 15 consecutive months. A reading above 50 indicates expansion, while a reading below 50 indicates contraction.

October Caixin PMI

The Caixin manufacturing PMI shows the outlook for small and private manufacturers, while the official PMI gives more weight to large state-owned companies. The Caixin PMI for October 2017 was 51—unchanged from the previous month. It has been above 50 for five consecutive months. From the various indexes, you can see that China’s manufacturing sector was weak in October.

Oil demand

Manufacturing activities drive the oil demand. As the manufacturing industry expands, the demand for oil increases and vice versa. An increase in oil demand benefits the crude oil tanker industry. Some of the major crude oil tanker companies are Nordic American Tankers (NAT), Euronav (EURN), General Maritime Partners (GNRT), Tsakos Energy Navigation (TNP), and Navios Maritime Midstream Partners (NAP).

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