GROWTH in China’s manufacturing sector cooled more than expected in October in the face of tighter pollution regulations that are forcing many steel mills, smelters and factories to curtail production over the winter.

While still easily in expansionary territory, China’s monthly official factory survey also showed unexpected weakening in new export orders, which had been expected to pick up heading into the peak year-end shopping season.

“Some regions stepped up pollution controls this month, with firms adjusting, halting or staggering production,” National Bureau of Statistics official Zhao Qinghe said in comments published with the data yesterday.

Zhao said that activity in energy-intensive and polluting industries slowed in October, while high-end manufacturing and consumption-related manufacturing continued to grow.

The official Purchasing Managers’ Index (PMI) released yesterday fell to 51.6 in October, from 52.4 in September, which was the strongest in over five years.

It was the weakest reading in three months, but remained above the 50-point mark that separates growth from contraction on a monthly basis.

Analysts surveyed had previously forecasted the PMI would fall slightly to 52.0, but still point to the 15th straight month of expansion.

The survey pointed to cooling demand at home and abroad. Export order growth nearly stalled, and was the weakest since December, while imports also slowed, though they remained in expansionary territory.

Large firms, many State-owned, continued to outperform small and mid-sized firms, with medium-sized companies backsliding the most in October.

Growth in China’s services sector also eased in October, but continued to show solid expansion, a sister survey showed, suggesting it may offset much of the downdraft from the loss of steam in manufacturing.

The official non-manufacturing PMI fell to 54.3 from 55.4 in September, which was the strongest reading since May 2014.

(SD-Agencies)