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CHINA DATA: PMIs Underscore Policy Stimulus Needs, Manufacturing In Contraction

CHINA DATA
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China's official PMIs were mixed for September. The manufacturing index firming to 49.8 from 49.1 in August (consensus was 49.4), while services eased to 50.0 versus 50.3 prior (50.4 was the consensus). The Caixin PMIs were both well below analysts forecasts - manufacturing at 49.3 versus 50.5 forecast and 50.4 prior, while services printed at 50.3, against a 51.6 forecast and 51.6 prior. 

  • On balance, the data underscored the need for further policy stimulus, which the authorities stepped up last week. We saw clear softness in the services side of the economy, which related to consumer spending/domestic confidence. Even on the manufacturing side, while the official read improved more than expected, both it and the Caixin manufacturing read sit in contraction territory.
  • In terms of the detail on the manufacturing side, output rebounded strongly to 51.2, while the new orders to inventory ratio also rose, pointing to near term resilience for the index.
  • Still, external conditions deteriorated, with export orders down to 47.5 from 48.7. Pricing measures rose but still remain comfortably sub 50.0.
  • On the services side, it was weakness across the board in terms of new orders, employment and pricing measures. 
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China's official PMIs were mixed for September. The manufacturing index firming to 49.8 from 49.1 in August (consensus was 49.4), while services eased to 50.0 versus 50.3 prior (50.4 was the consensus). The Caixin PMIs were both well below analysts forecasts - manufacturing at 49.3 versus 50.5 forecast and 50.4 prior, while services printed at 50.3, against a 51.6 forecast and 51.6 prior. 

  • On balance, the data underscored the need for further policy stimulus, which the authorities stepped up last week. We saw clear softness in the services side of the economy, which related to consumer spending/domestic confidence. Even on the manufacturing side, while the official read improved more than expected, both it and the Caixin manufacturing read sit in contraction territory.
  • In terms of the detail on the manufacturing side, output rebounded strongly to 51.2, while the new orders to inventory ratio also rose, pointing to near term resilience for the index.
  • Still, external conditions deteriorated, with export orders down to 47.5 from 48.7. Pricing measures rose but still remain comfortably sub 50.0.
  • On the services side, it was weakness across the board in terms of new orders, employment and pricing measures.