"The industry has reached a crucial stage in its structural transformation. Tepid demand is a main factor behind the oversupply of manufacturing and why it has not recovered."
- Caixin-Markit survey
Activity in China's all-important manufacturing sector continued to shrink during September, but at a slightly softer pace, as was revealed by two separate industry reports. The government's official gauge of factory activity improved, with the manufacturing index rising to 49.8 points in the reported month, up from August's three-year low of 49.7. Nevertheless, PMI measure stayed below the 50 level, marking two straight months of decline. At the same time, markets expected the index to remain at 49.7 in September. The second contraction in a row in the manufacturing sector is prompting fresh calls for China's government to add more stimulus, as the economy continues to display signs of weakness.
In the meantime, a private survey by Caixin revealed that their industry index fell to a fresh six-and-a-half year low of 47.2 in September, ticking down from reading of 47.3 in the prior month. However, the final reading improved slightly, compared with an earlier flash estimate of 47. Unlike the government's gauge, which concentrates on large firms, Caixin's survey focuses on smaller and medium-sized companies. Meanwhile, a decline in manufacturing activity in China comes amid a broader economic slowdown, led by downturn in the property market.
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