Sep 23, 2015 09:45 AM

China Manufacturing Weakening, PMI Data Show

(Beijing) – China's manufacturing activity continued to weaken in September, a trend highlighted by the sharpest contraction in 78 months for the preliminary Caixin China Purchasing Managers' Index.

The preliminary index for September fell to 47 from the sector's final PMI reading for August of 47.3. Any reading above 50 points to business growth, while anything below 50 signifies contraction.

Figures for components of the index indicate that manufacturing output also decreased in September at the fastest rate seen in 78 months. New orders fell more sharply month-on-month in September than between July and August, and manufacturers continued to shed workers. Both input and output prices continued falling, indicating a lack of momentum for inflation.

"The principle reason for the weakening of manufacturing is tied to previous changes in factors related to external demand and prices," said Dr. He Fan, chief economist and director of research at Caixin Insight Group, a financial data and analysis platform that complements Caixin Media's news services.

"Fiscal expenditures surged in August, pointing to stronger government efforts on the fiscal policy front," he said. "Patience may be needed for policies designed to promote stabilization to demonstrate their effectiveness."

The final PMI for September will be released on October 1.

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