China’s official measure of manufacturing activity reported a smaller-than-anticipated contraction in September, as Beijing stepped up its campaign to reduce industrial overcapacity amid slow domestic demand and global trade disruptions.
According to a Reuters poll, National Bureau of Statistics data indicated that the Index of Manufacturing Purchasing Managers remained at 49.8, juxtaposed against 49.6. This was the best reading in contraction since March, but still indicated contraction.
The official manufacturing PMI in China has remained below the 50 benchmark, which indicates expansion and contraction since April, as manufacturers struggle to deal with lackluster domestic demand, which has been exacerbated by increased U.S. tariffs, which have hit the exports of Beijing to the largest consumer market in the world.
The manufacturing PMI of the private surveyor RatingDog was 51.2 in September, surpassing the forecast of economists of 50.2 in a Reuters poll, the highest since May.
The official non-manufacturing PMI that features services and constructions nudged down to 52.9 in September, as compared to 53 in the previous month, and the RatingDog general services PMI relaxed to 50 compared to 50.3.
In the past years, the official polls have given a broader sense as compared to private ones, such as those made by Caixin and S&P Global, because they have given more attention to the export-oriented manufacturers.
President and chief economist at Pinpoint Asset Management, Zhiwei Zhang, said that an October meeting of the Politburo in China, a group of senior members of the ruling Chinese Communist Party, is likely to provide some clues on the economic policy plans of Beijing in reaction to the third-quarter slowdown.
He further added, “Since the GDP growth was above 5% in H1, the government may tolerate the slowdown in H2 as long as it doesn’t jeopardize the full year growth target of 5%.”
