Analysts expect China’s economy to grow just 3 per cent this year, a pace that would be its slowest since 1976, excluding the 2.2 per cent expansion during the initial Covid hit in 2020; the International Monetary Fund forecast Asia will contribute around 70 per cent of global growth.
For one September reading, Zhao Qinghe, a senior NBS statistician, attributed China’s manufacturing PMI falling below the 50-point threshold to low business volumes in high energy-consuming industries and a significant decline in supply and demand there. Coal shortages, tougher emissions standards and strong demand drove coal prices to record highs, leading to widespread curbs on electricity use in at least 20 provinces and regions.
The indicators below come from separate releases and reporting periods. Their September and October readings are individual snapshots, rather than one continuous monthly sequence.
In one release, China’s official manufacturing PMI was 50.1 in August, just above the threshold separating growth from contraction. It fell to 49.6 in September from 50.1 in August, entering contraction for the first time since February 2020.
Factory output in the official survey also moved into contraction for the first time since February last year, with its sub-index at 49.6, down from 50.1 a month earlier.
A separate Caixin/S&P Global manufacturing PMI fell to 48.1 in September from 49.5.
New orders declined for a second consecutive month, reaching 49.3 in September compared with 49.6 in August. The employment sub-index remained in contraction at 47.8, versus 47.0 a month earlier.
High energy-consuming industries faced the sharpest pressure. Both indexes were below 45.0, Zhao said, indicating a significant drop in supply and demand. Raw-material costs added to the strain, with the relevant sub-index climbing to 63.5 in September from 61.3 a month earlier.
A separate October release said China’s manufacturing activity unexpectedly contracted after an expansion in the preceding month. The result raised concerns about China’s economic momentum as Beijing sought to meet its annual growth target.
In another September decision, the People’s Bank of China left its benchmark lending rate for corporate and household loans unchanged for the 17th month.
Separate factory surveys also showed weakness beyond China. S&P Global’s final manufacturing PMI for the euro zone fell to a 27-month low of 48.4 in September. Manufacturing contracted for a third month in Germany, while France recorded its fastest contraction since May 2020.
Britain’s manufacturing output declined for a third consecutive month in September and orders fell for a fourth month. Japan’s output recorded its sharpest decline in a year as demand weakened in China and other trading partners, while Japanese new orders shrank at the fastest rate in two years.
South Korea’s PMI fell to 47.8 in June, extending its downturn to a record 12th consecutive month. PMI surveys also showed factory contractions in Taiwan, Vietnam and Malaysia, while India’s manufacturing sector showed slight expansion.
Toru Nishihama, chief emerging market economist at Dai-ichi Life Research Institute, said Asian factories may have passed their worst point, though activity lacked momentum amid diminishing prospects for a strong Chinese recovery. He said delayed Chinese stimulus, US rate hikes and weak prospects in China were weighing on manufacturers’ outlooks.
Separately, Tesla Inc announced lower-than-expected electric vehicle deliveries in the third quarter.
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