China Sept Caixin manufacturing PMI: Output expands only slightly

China Sept Caixin manufacturing PMI came at 50.1, in line with expectations vs 50.00 last, signaling that manufacturing output expanded only slightly.

Summary

Having stagnated in August, Chinese manufacturers signalled little-change to overall operating conditions during September. On a positive note, output and total new orders continued to expand, albeit marginally, while firms raised their purchasing activity for the third month in a row. However, cost-cutting initiatives contributed to a further marked reduction in employment.

As a result, companies signalled a sustained squeeze on operating capacity as highlighted by a further increase in the amount of outstanding business. Inflationary pressures appeared to intensify during September, with both input costs and output charges rising at quicker rates than in August.

Commenting on the China General Manufacturing PMI™ data, Dr. Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group said: “The Caixin China General Manufacturing PMI for September edged up slightly from the August level to 50.1, above the neutral 50-point level separating expansion from contraction."

Dr. Zhengsheng Zhong added: "The index readings for new orders and stocks of purchases improved from the previous month while the reading for output slipped, but remained in expansion territory. The readings for the manufacturing PMI over the past three months seem to indicate that the economy has begun to stabilize."

"But given that the growth rate of fiscal income has slowed recently while expenditures have swung, there is insufficient momentum to drive future economic growth, and there is a risk that industrial output may decline" Dr. Zhengsheng Zhong concluded.