CHINA'S big manufacturers reported their activities grew at the slowest pace in almost three years last month, while smaller private factories said their performance improved more quickly, two surveys found yesterday.
The contradictory results are a reflection of more agility among private firms, against a deteriorating global economic backdrop, analysts said.
The official Purchasing Managers' Index, a comprehensive gauge of manufacturing activities across the country, scaled back to 50.4 in October from 51.2 a month earlier, said the China Federation of Logistics and Purchasing.
The reading came in as the lowest since February 2009 but was still higher than 50 - a threshold pointing to expanding activities.
"A weaker-than-expected official PMI was driven low by new orders and new export orders and the employment index," said Chang Jian, an economist at Barclays Capital. "Further deterioration in external demand could push the official PMI below 50 in the coming months."
In contrast, the HSBC China Manufacturing Purchasing Managers' Index rose at its fastest pace since May and settled at 51 - up from September's 49.9 and reversing a downward trend.
While the official PMI, which is weighted towards big domestic companies, the HSBC survey is slanted more towards privately-owned and export-oriented firms.
"The HSBC PMI confirms the notable improvement in China's manufacturing activities driven by new business," said Qu Hongbin, chief economist for China at HSBC.
Zhou Hao, an economist at Australia and New Zealand Banking Group Ltd, said while conditions among private factories improved, China's manufacturing as a whole called for policy adjustment supportive of industrial growth. "The sharp moderation of the official PMI suggests the urgency of fine-tuning," Zhou said.
He said the most likely measure will be required reserve ratio cuts for small and medium-sized banks, ease liquidity pressure.
Premier Wen Jiabao said last week that China should fine-tune macroeconomic policies and maintain reasonable credit growth to sustain economic expansion.
It indicated the authorities may temporarily stop further tightening and balance liquidity for smaller firms.
China's gross domestic product expanded 9.4 percent year-on-year in the first three quarters, slower than last year's 10.4 percent.