China’s Caixin PMI Manufacturing registered a modest dip in September, dropping to 50.6 from previous 51.0. This reveals a deceleration in growth of the manufacturing sector, albeit still remaining in the expansionary range.
According to the report, the second consecutive month saw an increase in both production and new orders. However, one area of concern is sharp acceleration in input cost inflation, which has reached its highest point in eight months. Despite the ongoing growth, employment scenario seems to be losing steam, with a reported decline, mirroring subdued business confidence.
The situation isn’t brighter on the services front. Caixin PMI Services for September recorded a fall from 51.8 to 50.2, marking the lowest value over the past nine months of growth. Though there’s a slight increase in services activity, it comes amid decelerating sales growth. Employment in the sector expanded, but only marginally. This subdued performance correlates with the dip in business confidence, which is currently at a ten-month low.
Wang Zhe, Senior Economist at Caixin Insight Group, elaborated on the data, stating, “Both manufacturing and services PMIs tumbled despite remaining in expansionary territory, with the latter falling at a more pronounced rate.”
He further pointed out the concerning trend in the manufacturing sector’s employment dynamics, which has affected the overall job market. Despite limited growth, output prices witnessed a sharp increase, marking their most rapid ascent since March 2022.
Zhe also commented on the broader economic context: “Over the past few months, Beijing has introduced multiple policies aimed at encouraging consumption, expanding investment and stabilizing expectations. Various important economic indicators have shown marginal improvement, and the macroeconomy has shown signs of stabilization. However, the economic recovery has yet to find a solid footing, with insufficient domestic demand, external uncertainties, and pressure on the job market.”
To sum up, while China’s economic indicators point to marginal improvement, the underlying data suggests there is a long road ahead to achieve a stable and robust economic recovery. The recent PMI readings, in particular, indicate potential headwinds in both the manufacturing and services sectors.
Full China Caixin PMI manufacturing and services releases.
