The Caixin China General Manufacturing Purchasing Managers’ Index (PMI), showed China’s factory activity expanded at the fastest pace in 19 months in September, with a reading of 51.4, up from 50.4 in August, the highest level since early 2018.
The index – which gives an independent snapshot of China’s manufacturing orders – has signaled improving conditions with the 51.4 reading above the expected 50.2 and up from August’s surprise rise to 50.4 from July’s 49.9.
The highly-regarded Caixin index, one of the earliest available monthly indicators showing the latest economic conditions in China, is a closely-watched indice with a reading of 50 dividing expansion from contraction.
Meanwhile, China’s National Bureau of Statistics (NBS) purchasing managers’ index (PMI) recorded 49.8 in September, up from 49.5 in August.
“China’s manufacturing sector saw a modest improvement in overall operating conditions during September,” Caixin says. “Production and total new orders both expanded at quicker rates than in August, despite a further reduction in new export business. Staffing levels were broadly unchanged, however, leading to a stronger increase in backlogs of work,” it says.
At the same time, firms expanded their buying activity and inventories, albeit at marginal rates. Currency movements meanwhile contributed to a renewed rise in average input costs, while prices charged were broadly stable after a two-month sequence of discounting, Caixin says.
Chinese goods producers continued to express a relatively subdued level of confidence towards future output, as worries persisted over the outcome of the ongoing China-US trade negotiations, it adds.
The increase in the headline figure was partly driven by a faster rise in overall new work. The latest upturn in new orders, though modest, was the quickest since March 2018. “Underlying data continued to signal that the increase was supported by firmer domestic demand, as new work from abroad continued to decline,” is continued.
“That said, the latest reduction in new export orders was only slight. Companies often commented that the ongoing China-US trade dispute had continued to dampen foreign sales. Higher volumes of total new work led firms to expand production again in September. The rate of growth was the fastest seen since August 2018.”