China’s manufacturing sector faced a sharp downturn in September as new orders, both domestically and internationally, cooled, leading to a significant drop in factory owners' confidence.
The Caixin/S&P Global manufacturing purchasing managers’ index (PMI) fell to 49.3, down from 50.4 in August, missing market expectations of 50.5, and posting its lowest reading since July 2022.
Despite recent aggressive economic stimulus measures by Chinese authorities, including interest rate cuts and liquidity injections, the sector remains under pressure.
Last week, in an unusual Politburo meeting focused on macroeconomic challenges, China's leaders acknowledged "new problems" and pledged more forceful actions to stimulate growth.
Production increased for the 11th consecutive month, but new orders saw their steepest decline in two years. Export orders, which had previously been a positive factor, also fell at the fastest pace since August last year, partly due to weakening foreign demand and trade tensions with the U.S. and European Union.
Factory confidence was further dampened, with optimism falling to its second-lowest level since records began in 2012. Input prices and export charges also declined, leading to intensified competition and cost-cutting measures. The rate of job losses was the highest in five months, reflecting reduced workloads and cost concerns.