China September factory activity expands marginally as orders edge up-Caixin PMI

Thu Sep 29, 2016 9:56pm EDT
 
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BEIJING, Sept 30 (Reuters) - China's factory activity expanded in September as domestic and export orders picked up but the improvement was marginal and manufacturers continued to shed jobs, a private business survey showed on Friday.

The Caixin/Markit Manufacturing Purchasing Managers' index (PMI) rose to 50.1, in line with analysts' forecasts and slightly higher than August's no-change mark of 50.0, which separates expansion of activity from contraction on a monthly basis.

The reading has bounced around the neutral 50 level for the best part of five years, pointing to stubbornly sluggish demand.

Output expanded in September, but at the slowest pace in three months, the survey showed.

Overall new orders also continued to show modest growth, with new orders edging into expansionary territory after nine months of contraction.

Despite easing to its slowest for nine months, the rate of job shedding remained marked overall. Around 8 percent of companies surveyed reported lower headcounts, with a number of firms attributing the fall to cost-cutting.

But companies were able to pass along higher input costs and raise selling prices of their goods by a sharper pace than in August, suggesting they were regaining pricing power.

"The readings for the manufacturing PMI over the past three months seem to indicate that the economy has begun to stabilize," Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group, said in a note accompanying the PMI report.

A construction boom fueled by government infrastructure spending and a housing market rally have helped to underpin growth in the world's second-largest economy in recent months, though small and mid-sized private firms like those which dominate the Caixin survey have continued to struggle.   Continued...

 
A worker verifies a product at a steel factory in Dalian, Liaoning province, China September 1, 2016. China Daily/via REUTERS