Chinese manufacturing activity shrank for a sixth consecutive month in September, official purchasing managers index data showed on Tuesday, while service sector activity also weakened.
But a separate, private PMI survey showed both manufacturing and services activity growing much more than expected in September.
Manufacturing PMI read 49.8 in September, government data showed. The print was slightly stronger than expectations of 49.6 and the prior month’s reading of 49.4.
A reading below 50 indicates contraction, with China’s manufacturing sector having shrunk consistently since April this year.
Private PMI data presented a different picture. The RatingDog China manufacturing PMI grew to 51.2 in September, more than expectations of 50.2 and above last month’s reading of 50.5.
The print showed manufacturing growth at its strongest level in six months, and reflected a much sharper increase in exports than seen in the government data.
The RatingDog PMI, formerly the Caixin PMI, differs from the government reading-- while the government print focuses more on bigger, state-run enterprises in the north, the private data covers smaller private enterprises in the south.
Investors usually use both PMIs to gain a broader picture of the Chinese economy.
While Tuesday’s readings did show some improvement in September, it still pointed to the manufacturing sector remaining largely under pressure from soft overseas demand, especially in the United States.
China is still subject to at least 50% tariffs on its exports to the U.S., a trend that has weighed heavily on demand. Softening economic growth in other export destinations also weighed on overseas demand.
Outside manufacturing, government and private readings on service sector activity also largely differed. Government non-manufacturing PMI read 50.0 in September, weaker than expectations that PMI would remain steady at the 50.3 seen in the prior month.
The RatingDog services PMI read 52.9 for September, more than expectations of 52.3 but slightly below the prior month’s reading of 53.0. But the print was far more upbeat than the government reading.
Tuesday’s mixed data largely furthers the case for more stimulus measures from Beijing, with recent consumer subsidies and liquidity measures seen providing limited support to the economy.
Beijing had doled out a slew of measures aimed at boosting consumer spending and business activity in late-2024, which had boosted growth in the beginning of the year. But economic support from these measures was seen petering out in recent months.
Analysts say more policy support needed
But analysts were doubtful whether more policy support would substantially boost growth in the long term.
"With fiscal easing set to provide less of a prop over the coming months, we are sceptical that economic growth is on the cusp of a sustained rebound," Capital Economics analysts wrote in a note.
They noted that exports had picked up despite pressure from high U.S. tariffs. But overcapacity in Chinese factories and weak output prices still remained major overhangs for manufacturing and inflation.
ING analysts said that Chinese economic growth had been underpinned chiefly by exports so far in 2025, and that this trend was likely to continue in the remainder of the year.
Still, they noted that Tuesday’s data showed continued, albeit slow improvement in China’s massive manufacturing sector.
But economic prints for the third quarter so far still underscored the need for more policy support in the coming months, ING analysts said.
The brokerage expects one more 10 basis point rate cut and a 50 bps reserve-requirement ratio cut before the year-end.
Source :
https://www.investing.com/news/economy-news/china-manufacturing-pmi-shrinks-for-sixth-consecutive-month-in-september-4262183
