A worker assembles a loader’s transmission mechanism at a factory in Qingzhou, China.
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Chinese factory activity contracted for the fifth consecutive month in September as the second largest economy in the world struggles to revive its growth momentum.
The official manufacturing purchasing managers’ index came in at 49.8 in September, compared with 49.1 in August, 49.4 in July and 49.5 in June, according to data from the National Bureau of Statistics released on Monday.
PMI readings above 50 indicate expansion in activity, while readings below that level indicate contraction. The data beat the 49.5 expected among economists polled by Reuters.
Zhao Qinghe, a senior statistician at NBS, said that the overall economic sentiment has improved with the PMI rising to 49.8%, and manufacturing activity has picked up speed, with high-tech manufacturing and equipment manufacturing continuing to lead.
However, China’s Caixin PMI was 49.3, compared with 50.4 in August, according to a private survey compiled by S&P Global.
Caixin data released on Monday showed that China’s manufacturing sector contracted the sharpest in 14 months in September, driven by falling demand and a weakening labor market.
Problems for the manufacturing sector continue to increase as the prolonged economic slowdown and the property crisis reduce domestic demand. Meanwhile, Western restrictions on China’s exports, including electric vehicles, are raising concerns.
The data is the latest in a string of disappointing Chinese economic signs. The world’s second largest economy is still struggling with weak domestic demand, a slump in the housing sector and rising unemployment.
China’s industrial profits in August fell 17.8% from a year ago, marking the biggest drop in a year, according to data released by the National Bureau of Statistics on Friday.
China’s urban retail sales, industrial production and investment all rose more slowly than anticipated last month, with retail sales rising 2.1% and industrial production rising 4.5% from a year ago.
Last week, the Chinese Government stepped up its efforts to maintain weak economic growth. The People’s Bank of China cut the reserve requirement ratio or RRR, the amount of cash banks need as reserves, by 50 basis points. It also lowered the seven-day reverse repurchase rate from 1.7% to 1.5%, a reduction of 20 basis points.
China’s top leaders on Thursday also held a high-level meeting chaired by President Xi Jinping, where they called for an end to the property slump, and stressed the need for stronger fiscal and monetary support.
Following the announcement, China’s equity markets rallied, with the market posting its best week in nearly 16 years.
This is a developing story. Please check back later for updates.
