China's manufacturing PMI at 50 in September

The improved headline index reading was supported by a renewed upturn in total sales and a softer reduction in output.

Sep 30, 2021 11:09 IST India Infoline News Service

The headline seasonally adjusted Purchasing Managers’ Index (PMI) – a composite indicator designed to provide a single-figure snapshot of operating conditions in the manufacturing economy – rose from 49.2 in August to 50.0 in September.

This indicated that business conditions stabilised at the end of the third quarter, after a slight deterioration in the previous month. Nonetheless, the latest reading was the second-lowest seen for the past 17 months.

The latest PMI data indicated that business conditions across China's manufacturing sector stabilised in September, after a slight deterioration in August. The improved headline index reading was supported by a renewed upturn in total sales and a softer reduction in output. At the same time, purchasing activity also returned to growth, while confidence towards the year ahead also strengthened. Supply chain delays persisted, however, amid sustained reports of material shortages. This in turn drove sharper increases in both input costs and output prices.

The higher headline index figure was partly driven by a renewed upturn in overall sales during September. Though only slight, it was the first time new work had increased for three months. Underlying data suggested this was largely driven by firmer domestic demand, as export sales continued to decline. A number of companies commented on improved customer numbers

Commenting on the China General Manufacturing PMI data, Dr. Wang Zhe, Senior Economist at Caixin Insight Group said: “The Caixin China General Manufacturing PMI came in at 50 in September, showing that conditions in the manufacturing sector remained unchanged from the previous month. Factors including the reappearance of Covid-19 in several regions and raw material shortages continued to hurt the economy”.

“Supply in the manufacturing sector continued to shrink, while demand improved. The resurgence of the epidemic in several regions and shortfalls in raw material supplies slowed production at manufacturing companies, with the gauge for output contracting for the second straight month in September. Demand improved, though marginally, with demand for consumer goods in the doldrums. Overseas demand was relatively weak as new export orders largely decreased in September. The epidemic again emerged overseas. Global shipping capacity was also clearly insufficient,” Dr. Wang Zhe added.

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