Caixin’s survey and the Chinese government’s poll of the country’s manufacturing activity diverged in September, with the private reading declining to its lowest point in three months while the official one hit a five-year high.
The Caixin China General Manufacturing Purchasing Managers’ Index — closely watched by investors as one of the first available indicators each month gauging the strength of the Chinese economy — fell to 51.0 this month from 51.6 in August. The decline came as foreign demand softened markedly while costs spiked amid an ongoing government campaign to reduce excess capacity.
It was the lowest reading since June. A number above 50 indicates expansion, while anything below 50 points to contraction.
The increase in new export orders decelerated to the slowest rate in three months, pointing to easing overseas demand that played a key role in boosting China’s economic expansion earlier this year.
“The Chinese economy was stable in the third quarter,” said Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group, a subsidiary of Caixin Insight Group. “But the outstanding price pressure from upstream industries will be a drag on the continued improvement of companies’ profitability.”
In contrast, the official manufacturing PMI, released by the National Bureau of Statistics (NBS) also on Saturday, rose to 52.4 in September, the highest since April 2012, as growth in new orders reached its highest level in more than five years, outpacing the increase of output for the first time since January 2013.
“The subindex for new orders came in higher than that of output for the first time in a number of years, suggesting supply and demand are getting more balanced,” NBS analyst Zhao Qinghe said in a statement, adding that both the domestic and foreign market improved.
Growth of sectors including auto, electric and mechanical equipment, and computer and telecommunications equipment was sharply higher than the headline PMI number, reflecting that the country’s industrial structure has continued to optimize, he said.
The Caixin PMI, sponsored by Caixin and compiled by international information and data analytics provider IHS Markit Ltd., focuses more on light industry, while heavy industry makes up a larger share of the NBS survey. The geographic distributions of the companies covered in the two polls are also different.
Growing cost burden