China’s manufacturing PMI rebounded into expansion territory, ending a five-month contraction, according to data released by the National Bureau of Statistics on October 31. The October manufacturing PMI reached 50.1, up by 0.3 percentage points from the previous period, exceeding market expectations of 49.9 and signaling an initial recovery in manufacturing activity.

Among sub-indices, all components saw improvements. The production index remained in expansion, rising 1 percentage point to 52, and the new orders index increased from contraction at 49.8 to 50.0. However, inventory, employment, and supplier delivery time indices continued in contraction.

Additional indicators reflected varied conditions, the new export orders index dipped slightly to 47.3, indicating slower global demand, while the producer price index rose 5.9 percentage points to 49.9, reflecting higher raw material costs and a recovery in domestic demand. The raw material purchase price index climbed 8.3 percentage points to 53.4, and the Operation expectations index improved by 2 percentage points to 54.

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In the non-manufacturing sector, October’s PMI came in at 50.2, up by 0.2 percentage points from the prior period. While most key indices improved, only the input prices index reached expansion, with new orders, sales prices, and employment still in contraction territory.

Industry-specific analysis showed the construction sector’s business activity index declined by 0.3 percentage points from the previous month to 50.4, while services edged up by 0.2 percentage points to 50.1. Transportation, capital market services, and public utility management sectors had business activity indices above 55, whereas accommodation, software and IT services, and real estate sectors remained in contraction.

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Overall, large-scale equipment upgrades and policies promoting consumer goods replacement are gradually supporting a recovery in manufacturing. Accommodative monetary policies also bolster manufacturing and services to some extent. China’s National People’s Congress Standing Committee is set to convene from November 4 to November 8, and the strength of any new policies released will be crucial for sustaining demand recovery and meeting the 5% annual GDP growth target.

The U.S. job openings in September reached their lowest level in nearly three years, according to data released by the U.S. Bureau of Labor Statistics on October 29.

Job openings fell by 418,000 to 7.443 million, marking the lowest level since January 2021, with the job opening rate declining by 0.2 percentage points to 4.5%. This decrease was primarily observed in the healthcare and social assistance sector (-79,000) and government roles (-107,000).

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Hires rose by 128,000 to 5.558 million, with the hiring rate increasing by 0.1 percentage points to 3.5%.
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Total separations rose by 280,000 to 5.196 million, maintaining a separation rate of 3.3%.

Quits dropped by 107,000 to 3.071 million, with the quit rate declining by 0.1 percentage points to 1.9%, the lowest since June 2020. Layoffs, however, rose by 165,000 to 1.833 million, pushing the layoff rate up by 0.2 percentage points to 1.2%, the highest since January 2023.

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Overall, the U.S. labor market continues to show signs of cooling. While employment data from July to September indicates some improvement, this may largely reflect a seasonal increase in short-term labor demand over the summer.

The cooling trend, marked by a decrease in job openings and a steady layoff rate, suggests the labor market remains relatively balanced. Strong economic indicators further reinforce market expectations that the Federal Reserve may proceed with a 0.25% rate cut at the upcoming November 7 meeting.

• Job Openings and Labor Turnover Summary

The U.S. consumer confidence rebounded, achieving its largest gain since March 2021, as labor market conditions improved, according to data released by the Conference Board on October 29.

The Consumer Confidence Index rose to 108.7 in October, marking an increase of 9.7 points from the previous month and achieving its largest gain since March 2021, though it remains below pre-pandemic levels. The Present Situation Index rose 14.2 points to 138, while the Expectations Index climbed 6.3 points to 89.1, reaching its highest level since December 2021.

Dana M. Peterson, Chief Economist at the Conference Board, stated that consumers are optimistic about current business conditions and have shown renewed confidence in the labor market after several months of weakness.

The report indicates that the percentage of consumers who see job opportunities as plentiful increased by 3.8 percentage points to 35.1%, while those who find jobs hard to get declined to 16.8%, widening the gap for the first time since January.

Consumers also expressed greater optimism regarding future business activity and personal financial prospects. The survey indicates that expectations of an economic downturn over the next 12 months are at their lowest level since July 2022, while plans to purchase durable goods, such as homes and automobiles, continue to increase.

Interestingly, interest in the upcoming election appears to be lower than in previous years. Election-related keywords ranked first and second in 2016 and 2020, but for 2024, they fell to fifth, with inflation and price-related keywords now taking precedence.

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• Confidence Rebounded in October as Consumers Regained Faith in the US Economy

Crude oil prices have sharply declined, marking the largest single-day drop in nearly two years as Israel’s recent strikes on Iran avoided impacting any oil extraction facilities, thereby reducing the political risk premium associated with the Middle East.

Last Saturday, Israel launched airstrikes on Iranian military targets in retaliation for nearly 200 missiles fired by Iran three weeks ago. However, at the request of U.S. President Joe Biden, Saturday’s strikes spared any OPEC+ member oil extraction facilities from damage.

According to an early October report by the U.S. Energy Information Administration (EIA), the recent decline in oil prices led to a downward revision in EIA’s 2025 daily oil supply growth forecast to about 2 million barrels per day (previously 2.4 million). Nevertheless, with OPEC+ extending production increases through late 2024 and non-OPEC nations also increasing output into 2025, global daily oil supply for 2024 and 2025 is still expected to reach 102.5 million and 104.5 million barrels, respectively.

On the demand side, with slower Chinese oil imports and a global manufacturing downturn, the EIA adjusted down its demand forecasts for both China and OECD countries. Global daily oil demand is now expected to reach 103.1 million barrels in 2024 and 104.3 million barrels in 2025.

Additionally, projected net daily demand growth has been revised downward for Q1 2024 and Q2 2025, to approximately 600,000 and 500,000 barrels, respectively, down from earlier forecasts of 1.2 million and 900,000 barrels.

Overall, with Middle Eastern political risk premium decreasing, crude oil prices are now trending towards a fundamentally weaker outlook for the mid-to-long term. As of October 28, WTI crude futures dropped to $67.38 per barrel, while Brent crude also fell to $71.42 per barrel.

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Japan’s labor market continued to show tightness in September, according to data released by the Ministry of Internal Affairs and Communications and the Ministry of Health, Labour and Welfare on October 29.

The unemployment rate fell to 2.4%, down from 2.5% in the previous month, while the job-to-applicant ratio rose to 1.24 from 1.23, highlighting persistent labor shortages in the Japanese workforce.

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Japan’s largest labor union, Rengo (the Japanese Trade Union Confederation), also announced its intention to seek a 5% wage increase in next year’s negotiations, following a record 5.1% raise this year—the largest in 33 years.

This tight labor market offers a relatively positive signal for the Bank of Japan (BOJ), which has long aimed to support moderate inflation through real wage growth as part of its strategy to normalize monetary policy.

In March, the BOJ raised rates for the first time in eight years, ending its negative interest rate policy and yield curve control. In July, it raised rates again, suggesting it would consider further hikes if inflation met expectations.

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While these comments initially triggered significant market volatility, the BOJ has since clarified that it would avoid rate hikes during periods of economic instability, aiming to calm market concerns. Nevertheless, its commitment to policy normalization remains clear.

The market broadly expects the BOJ to hold rates steady in October, with further rate hikes possible in December or January.