 "China factories still in slump")
The slump in China's sprawling manufacturing sector continued to worsen in September, data released on Thursday showed, the latest sign that the country's economic slowdown appears to be sharpening.
Manufacturing output, as measured by the official purchasing managers index was 49.8 points in September, compared with a reading of 49.7 in August. The survey measures the change in conditions from the previous month; readings below 50 signal a contraction.
The results of another survey, compiled by Caixin, a Chinese financial news company, and Markit, an economic data provider, suggested an even steeper contraction. The Caixin manufacturing PMI, also released Thursday, was 47.2 in September, down slightly from 47.3 in August and the lowest reading since the depths of the global financial crisis in March 2009.
"The industry has reached a crucial stage in its structural transformation," He Fan, the chief economist at the Caixin Insight Group, said in a statement accompanying the data release. "Tepid demand is a main factor behind the oversupply of manufacturing and why it has not recovered."
China's economic growth has been battered in recent months by a falloff in housing construction and a huge oversupply in certain sectors, like steel and cement, that has idled plants or seen them operate at a loss. At the same time, lackluster demand in key export markets in Asia and the West has combined with a broad slump in trade and investment in emerging markets like Brazil, Russia or Turkey to weigh further on China's economic prospects.
On Monday, official figures showed profits at China's larger industrial firms contracted 8.8 per cent in August from a year earlier, the biggest drop since the state statistics agency began releasing monthly data in 2011. Profit fell 22 per cent at automakers and 72 per cent at oil and gas firms.
The statistics agency said industrial profits had been negatively affected by China's surprise decision on August 11 to devalue its currency, the renminbi, by the most in nearly two decades.
Such a move could benefit exporters, making China's goods relatively cheaper for overseas buyers. But it also makes imported materials more expensive for Chinese industrial companies.
While questions over China's economic data are not new, many economists now doubt the country will be able to reach its official target for economic growth of seven per cent this year, despite having reported achieving that rate in the first six months of the year.
Officials had hoped that consumer demand and the rise of a vibrant services sector would help offset the industrial slowdown and become the economy's main engines of growth.
Separate services PMI surveys released on Thursday showed that the sector continued to expand in September, but that growth, too, faces pressures. The official nonmanufacturing survey result was 53.4 points, unchanged from August. The Caixin services P.M.I. reading was 50.5, down from 51.5 in August and a 14-month low.
©2015 The New York Times News Service
