China’s factory activity in September plummets to lowest level since March 2009: surveys
Reports on mainland manufacturing suggest conditions are deteriorating and reinforce views Beijing will have to roll out even more stimulus measures soon to avert a sharper slowdown
Factory activity in China fell to a more than six-year low last month while growth in the once-resilient services sector came close to stalling, private surveys showed on Thursday - fuelling fears that the world's second largest economy may be slowing more sharply than expected.
An official survey, also issued on Thursday and focused on bigger companies, showed manufacturing contracted for a second straight month in September.
The official Purchasing Managers' Index (PMI) inched up to 49.8 from the previous month's 49.7, according to the National Bureau of Statistics.
A reading above 50 points indicates growth on a monthly basis, while one below points to contraction.
Watch: China's factories shrink further in August
Meanwhile, Markit said that the September 23 flash release was the last such advance report it would issue. The final reading of the monthly PMI would continue to be released on the first business day of the following month. Markit will still publish flash PMI readings for other countries. Markit declined to comment on the move.
China has two manufacturing PMIs, one from Markit and one published by Beijing's statistics agency.
The official version typically shows a stronger reading and is based on responses from 3,000 businesses. The Markit one surveys more than 420 firms, including smaller and medium-sized enterprises.
Though yesterday's official figure was slightly better than market expectations, the latest reading still suggests that conditions are deteriorating.
It also reinforces views that Beijing will have to roll out even more stimulus measures soon to avert a sharper slowdown.
"Even though the PMI recovered, it was still below the 50-point level and lower than the same historical period," said Zhao Qinghe, a bureau official.
"That showed the relatively weak internal and external demand and the manufacturing sector is still facing relatively big downward pressures," Zhao said.
Analysts had expected the figure to dip to 49.6, the weakest level since August 2012, as softening demand at home and abroad left many firms with idle capacity and less appetite for raw materials from iron ore and copper to petrochemicals and coal.
The final private Markit China Manufacturing PMI showed factory activity shrank to 47.2 in September, the lowest since March 2009 and weaker than 47.3 in August.
A similar survey for services fell for a second month to 50.5, its lowest since July 2014. The August reading was 51.5.
Many economists forecast a gradual economic slowdown as Beijing tries to overhaul its old "heavy industry and export" model into a more nimble one, reliant on services and consumer spending.
The health of the labour market could be key in determining how much stimulus authorities will deploy.
With sales weakening, manufacturers shed jobs for the 23rd month in September and at the fastest pace since January 2009.
However, companies in the services sector continued to hire.
Reuters, Bloomberg
