China’s Manufacturing PMI hovers between contraction and expansion

The Purchasing Managers’ Index (PMI) for China’s manufacturing sector rose to 49.8 in September, according to the National Bureau of Statistics of the People’s Republic of China. Analysts polled by Trading Economics were expecting 49.5, up from 49.1 in August. However, the index continues to show a contraction in business activity, remaining below 50 for the fifth consecutive month.

The sub-index for new orders stood at 49.9 in September, close to the threshold dividing expansion from contraction, compared with 48.9 in the previous month. The output sub-index moved into positive territory – 51.2, up from 49.8 in August. A gradual improvement in sentiment in the manufacturing sector is also evidenced by the business expectations sub-index, which remained at 52 points for the second consecutive month.

At the same time, against the backdrop of widening trade disputes, the export order sub-index slipped further into negative territory – it stood at 47.5 in September, down from 48.7 in August.

Manufacturing output growth slowed for the fourth month in a row amid unclear prospects for external and domestic demand. In the coming months, the massive measures taken by the authorities to support the economy should boost domestic demand in China, but their potential effectiveness is still questionable.

The PMI for the services and construction sectors fell to 50 in September from 50.3 in August.

The Composite PMI rose to 50.4 in September from 50.1 in August.