China Caixin Manufacturing PMI improved to 51.4 in September, up from 50.4 and beat expectation of 50.2. That’s also the highest reading since February 2018, signalling a recovery in the sector. Markit noted there were stronger increases in output and total new orders. However, new export business continued to decline. Staffing levels remained broadly unchanged.
Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group said: “The recovery in China’s manufacturing industry in September benefited mainly from the potential growth of domestic demand. The trade conflicts between China and the U.S. had a notable impact on exports, production costs and confidence of enterprises. Compared with growth in new orders, the employment situation recovered only a bit, indicating that structural issues may exist in the labor market. Central policymakers have recently been emphasizing the strong growth in the domestic market. Faster construction of infrastructure projects, better implementation of upgrading the industrial sector, and tax and fee cuts are likely to offset the influence of the subdued overseas demand and soften the downward pressure on China’s economic growth.”
Also released, the NBS PMI Manufacturing rose to 49.8 in September, up from 49.5 and beat expectation of 49.7. While there was and improvement, the sector remained in contraction for the fifth straight months. Total new orders improved and swung back to growth, indicating improving domestic demand. But new export orders dropped for the 16th month. Meanwhile factories continued to cut jobs with employment sub-index largely unchanged at 47.0.
