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Repeats Story Initially Transmitted at 03:34 GMT Sep 30/23:34 EST Sep 29
BEIJING (MNI) - Operating conditions in China's manufacturing sector
softened in September, dragged down by the weakest rise in new business in three
months and an easing in output to the lowest level since June, according to the
latest Caixin Manufacturing Purchasing Managers' Index (PMI) released Saturday.
The headline manufacturing PMI fell to 51.0 in September from 51.6 in
August but remained above the 50 break-even mark for fourth consecutive month,
according to data compiled by IHS Markit for Caixin.
Readings above 50 indicate expansion in the manufacturing sector while
readings below 50 indicate contraction. The higher the PMI reading above 50, the
faster the expansion in the sector. The lower the reading below 50, the faster
The slowdown in the Caixin index -- which focuses on smaller and
medium-size companies -- was in contrast to the sharp rise in the official
manufacturing PMI jointly released today by the China Federation of Logistics
and Purchasing and the National Bureau of Statistics. The CFLP/NBS PMI came in
above expectations at 52.4 in September, the highest level since April 2012,
due mainly to robust input and output prices.
The Caixin index showed that new business expanded at a slower pace due to
the weak demand. "Notably, new export work increased only marginally during the
latest survey period," Caixin said.
As a result, survey participants said they reduced their buying activity
during September. Although input demand moderated slightly, the average time
taken for input delivery lengthened in September to the largest since January,
with input providers delaying delivery times due in part to stricter
environmental policies and stock shortages of vendors, Caixin noted.
Companies continued to take a relatively cautious approach to employment,
with staff numbers falling in September amid reports of companies down-sizing.
"Lower staffing levels and a further upturn in new work placed put further
pressure on operating capacity, as shown by a sustained increase in backlogs of
work. However, the rate of accumulation eased to its weakest for five months,"
Inventories of raw materials declined in September for the first time since
June, although at a modest pace. Finished goods inventories also fell for the
fourth consecutive month.
Inflationary pressures ticked up, with both input prices and output prices
rising at faster rates, Caixin warned, adding input costs increased at the
fastest pace in nine months.
Manufacturers complained about higher raw material prices, so companies
raised output prices.
"Manufacturers remained optimistic that output would increase over the next
year, though the degree of optimism weakened slightly since August," Caixin
"The manufacturing sector continued to expand in September, although at a
slightly weaker rate. The Chinese economy was stable in the third quarter," said
Zhong Zhengsheng, director of Macroeconomic Analysis at CEBM Group, a research
subsidiary of Caixin, "But the outstanding price pressure from upstream
industries will be a drag on the continued improvement of companies'
profitability." Zhong warned.
The Caixin Manufacturing PMI is based on data compiled from monthly replies
to questionnaires sent to purchasing executives at more than 500 manufacturing
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