China Manufacturing Contracts at Fastest Rate in 14 Months, Caixin PMI Shows

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Activity in China’s manufacturing sector contracted at the fastest rate in 14 months in September as demand shrank and the labor market weakened, a Caixin-sponsored survey published Monday shows.

The Caixin China General Manufacturing Purchasing Managers’ Index (PMI), which gives an independent snapshot of the sector, came in at 49.3, down 1.1 points from August to hit the lowest level since July 2023. A reading above 50 indicates an expansion in activity, while a number below signals a contraction.

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China's manufacturing sector contracted at its fastest rate in 14 months in September, with the Caixin PMI dropping to 49.3.
Contraction was driven by falling demand, declining external orders, and the weakest employment since January; input costs fell due to metal price decreases.
In response, the PBOC introduced stimulus measures, including a 50-basis-point reserve requirement ratio cut and lower repo rates, injecting 1 trillion yuan ($142.6 billion) into the market.

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Who’s Who

Caixin Media Company Ltd.: Caixin Media Company Ltd. is known for its independent surveys and indexes, like the Caixin China General Manufacturing PMI. It provides timely and detailed economic data and insights. The company often releases early monthly indicators, making it a valuable source for understanding China's economic activities. For further information, contact reporter Qing Na (qingna@caixin.com) or editor Jonathan Breen (jonathanbreen@caixin.com).

Capital Economics Ltd.: Capital Economics Ltd. is represented by Julian Evans-Pritchard, who is the head of China economics at the firm. He commented on the recent stimulus measures by Beijing, describing them as a step in the right direction but insufficient unless followed by greater fiscal support to drive a turnaround in growth.

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What Happened When

June 2023：: Previous lowest level for input costs indicator before September 2024

July 2023：: Previous lowest level of Caixin China General Manufacturing Purchasing Managers’ Index before September 2024

August 2024：: Caixin China General Manufacturing PMI reading was higher before dropping to 49.3 in September 2024

August 2024：: Employment briefly stabilized in the manufacturing sector before shrinking at the fastest pace this year in September 2024

August 2024：: Supplier logistics experienced delays, similar to the delays in September 2024

Tuesday (relative to article publication date)：: People’s Bank of China and two other financial regulators announced a slew of stimulus measures

Friday (relative to article publication date)：: People’s Bank of China cut banks' reserve requirement ratio by 50 basis points and lowered the seven-day reverse repo rate from 1.7% to 1.5%

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