China’s manufacturing activity has been unable to escape its contraction phase for six months, marking the longest period of decline since 2019. On the 30th, China’s National Bureau of Statistics announced that the Manufacturing Purchasing Managers’ Index (PMI) for September increased by 0.4 points from the previous month to 49.8. This figure surpasses the median expectations gathered by Reuters and Bloomberg of 49.6, yet remains below the benchmark of 50. The PMI, based on surveys of company purchasing managers, serves as an indicator of the economic trend in the related sector. A reading above 50 suggests economic expansion, while below 50 indicates contraction. China’s manufacturing PMI has remained below 50 for six consecutive months from April’s 49.0 to September. Bloomberg reported this as the longest contraction phase for China’s manufacturing PMI since 2019.
Looking at company sizes, the PMI for large enterprises rose by 0.2 points to 51.0 in September, while the PMI for medium-sized enterprises fell by 0.1 points to 48.8. The PMI for small enterprises rose by 1.6 points to 48.2 but still indicated contraction. Among the five major indices comprising the manufacturing PMI, the production index (51.9, up 1.1 points from the previous month) and the delivery index (50.8, up 0.3 points) exceeded the benchmark, whereas the new orders index (49.7, up 0.2 points), the raw material inventory index (48.5, up 0.5 points), and the employee index (48.5, up 0.6 points) remained in contraction.
The non-manufacturing PMI, which includes construction and service industries, fell by 0.3 points from 50.3 to 50.0. The construction business activity index rose by 0.2 points to 49.3, while the service business activity index fell by 0.4 points to 50.1. Bloomberg noted that the September PMI is the first evidence of continued economic weakness through the end of the third quarter following the worst period in July to August this year. They highlighted that uncertainty around U.S. tariffs poses risks to Chinese exporters, while domestic demand stagnation is damaging the outlook for Chinese factories. Reuters also emphasized the dual pressure on the Chinese economy due to the prolonged slump in major factory activities, noting that domestic demand has failed to ascend to a sustained recovery after the COVID-19 pandemic, and Chinese factories are under strain due to tariffs imposed by U.S. President Donald Trump.
Reuters added that the ongoing decline in China’s manufacturing activity for six months indicates that producers are awaiting further stimulus measures to boost domestic demand and clarity on the U.S.-China trade agreement. Meanwhile, a private survey conducted by RatingDog and S&P Global showed China’s manufacturing PMI at 51.2 in September, up 0.7 points from 50.5 in the previous month. The services PMI slightly decreased from 53.0 to 52.9. This index, known as the ‘Caixin PMI’, is released by Caixin and S&P Global and is considered to reflect the economic trends of private, export-oriented enterprises and small to medium-sized enterprises more accurately than the official PMI.
[Photo source: AFP=Yonhap News]
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