Markit reports China Posts Lowest Business Sentiment On Record. Data only dates to November of 2009, so that makes sentiment worst since the recovery.

However, sentiment is so low, I it's possible sentiment is worse that any time in the past 20 or even 30 years, had it only been measured. Let's take a look at the report.

The latest Markit Business Outlook Survey signalled the weakest level of optimism amongst Chinese companies since data collection began late-2009. This was highlighted by a net balance of just +17% of firms expecting business activity to rise over the next year, down from a previous low of +23% in June.

Average input prices faced by Chinese businesses are expected to rise only slightly over the coming year. A net balance of just +3% of firms forecast higher input costs in October, down from +9% in June, to signal the weakest inflation expectations in the series history.

At the sector level, manufacturers anticipate a fall in cost burdens (net balance of -6%). This is the first time deflation has been forecast in the sector since mid-2012. In contrast, service sector companies expect input costs to increase over the next year, though October’s net balance of +14% is the lowest for a year.

China Business Expectations

Deflationary Pressures Rise

Sentiment largely reflects continuing deflationary cost pressures on manufacturers.

For details, please see China's PPI Drops 44th Month, Chinese Trade Slumps on Waning Demand, Deflationary Pressures.