Home China Chinese PMI's Surprise on the Upside

Chinese PMI’s Surprise on the Upside

Stockholm (Ekonamik) – The Caixin General Services PMI rose during the month of September, according to IHS Markit. The composite index, which covers both manufacturing and services, increased from 51.6 in August to 51.9 in September, to signal the strongest rate of growth since April.

“The Caixin China General Services Business Activity Index dipped to 51.3 in September from 52.1 in the previous month, the lowest reading in seven months,” commented Dr Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group.

The data release highlighted that the slower growth in services activity was offset by a stronger expansion of manufacturing output. Total new work also rose at its fastest pace since February 2018, while job creation in the services sector leads to the strongest strongest increase in composite employment since January 2013.

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“The Caixin China Composite Output Index increased to 51.9 in September from 51.6 in August, mainly driven by strengthened growth in the manufacturing sector,” the CEBM director added. “The gauge for new orders increased, hitting the highest level since February 2018. Employment increased at the fastest pace since January 2013, driven by the service sector. Backlogs of work had not expanded this quickly since April 2018. The pressure on companies from rising costs was great and business confidence dipped further.”

“China’s economy showed signs of marginal recovery in September, as the labor market improved and domestic demand increased at a faster pace,” Dr Zhong commented. “However, fluctuations in exchange rates and rising costs of labour and raw materials increased pressure on companies, which restrained business confidence. Due to previous destocking and capacity-reduction activities, constraints on companies’ production capacity became more severe and backlogs of work increased noticeably, which will help companies restore their investment. After a fast slowdown in previous quarters, China’s economic growth began to show signs of stability.”

These figures are a prelude to the release of Chinese GDP later this week, which will be a gauge of the effect of the USA-China trade war.

Image by iham mustakim from Pixabay


Filipe Wallin Albuquerque
Filipe Wallin Albuquerque
Filipe is an economist with 8 years of experience in macroeconomic and financial analysis for the Economist Intelligence Unit, the UN World Institute for Development Economic Research, the Stockholm School of Economics and the School of Oriental and African Studies. Filipe holds a MSc in European Political Economy from the LSE and a MSc in Economics from the University of London, where he currently is a PhD candidate.

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