The HSBC’s China PMI, a private measure of factory activity, shows only a fractional improvement in overall operating conditions faced by Chinese manufacturers.
It was mostly identical to that seen in August, but still in positive territory for Australian exporters.
Production increased at the slowest pace in the current four-month sequence of expansion, while job shedding across the sector extended into an eleventh successive month.
A slightly stronger expansion of total new business, largely driven by the strongest rise in new export work for four-and-a-half years, led to the quickest accumulation of backlogged work in 2014 so far.
After adjusting for seasonal factors, the HSBC Purchasing Managers’ Index (PMI) posted at 50.2 in September, unchanged from August’s three-month low, and consistent with only a fractional improvement in the health of the sector.
Hongbin Qu, Chief Economist, China, and Co-Head of Asian Economic Research at HSBC said:
“Overall, the data in September suggest that manufacturing activity continues to expand at a slow pace. We think risks to growth are still on the downside and warrant more accommodative monetary as well as fiscal policies.”
The rate of increase eased further from July’s 16-month high and was the slowest in four months of expansion.
Despite higher volumes of new work, companies continued to cut their staffing levels in September at a modest pace.
Manufacturers in China saw a second successive monthly fall in average costs in September amid reports of lower raw material costs.
According to anecdotal evidence, companies have been discounting in an attempt to get new business.