Executive Summary
- China’s official manufacturing purchasing managers’ index (PMI) remained in contraction for a sixth consecutive month in September.
- The manufacturing PMI registered 49.8 in September, a slight improvement from August but still below the 50-point threshold and missing economists’ projections.
- The sustained contraction underscores ongoing weaknesses in China’s industrial sector and reignites calls for increased government policy support.
The Story So Far
- China’s manufacturing sector has been in contraction for six consecutive months, with the official manufacturing purchasing managers’ index (PMI) remaining below the 50-point threshold, indicating persistent weakness. This ongoing slowdown is attributed to a combination of external economic headwinds and subdued domestic demand, leading to widespread calls for increased government policy support to stabilize growth.
Why This Matters
- China’s manufacturing sector remaining in contraction for a sixth consecutive month signals persistent economic weakness and external pressures, intensifying calls for significant government policy support to stabilize growth. The upcoming Politburo meeting will be crucial in revealing Beijing’s strategy, which may involve tolerating some economic deceleration as long as the annual GDP growth target remains achievable.
Who Thinks What?
- China’s National Bureau of Statistics data indicates that the manufacturing sector remains weak, with the Purchasing Managers’ Index (PMI) in contraction for a sixth consecutive month, falling short of economists’ projections.
- The sustained contraction and ongoing challenges from external pressures and weak domestic consumption reignite calls for increased government policy support and targeted interventions to stabilize economic growth.
- Zhang Zhiwei, chief economist at Pinpoint Asset Management, suggests that while economic momentum is weak, Beijing may tolerate some deceleration in the latter half of 2025, provided it does not jeopardize the annual gross domestic product growth target of “around 5 percent.”
China’s official manufacturing purchasing managers’ index (PMI) remained in contraction for a sixth consecutive month in September, reigniting calls for increased government policy support to counter persistent external headwinds and subdued domestic demand. The latest data, released Tuesday by the National Bureau of Statistics, underscores ongoing weaknesses in the nation’s industrial sector.
The manufacturing PMI registered 49.8 in September, a slight improvement from August’s 49.4 but still below the 50-point threshold that separates expansion from contraction. This figure also fell short of economists’ projections of 50.1, as surveyed by financial data provider Wind.
Economic Momentum and Policy Outlook
The index, compiled from survey data provided by supply chain managers across various sectors, indicates that economic momentum remains weak. Zhang Zhiwei, chief economist at Pinpoint Asset Management, noted that the third-quarter figures reflect this softness.
Zhang suggested that the upcoming October meeting of the Communist Party’s Politburo will be crucial in revealing the government’s policy response to the current slowdown. Despite the recent contraction, Beijing may tolerate some deceleration in the latter half of 2025, especially given the relatively strong economic performance observed in the first half of the year, provided it does not jeopardize the annual gross domestic product growth target of “around 5 percent.”
Key Takeaways
The sustained contraction in China’s manufacturing sector highlights the ongoing challenges posed by external pressures and weak domestic consumption. While the slight uptick in September offers a marginal improvement, the overall trend reinforces the need for targeted policy interventions to stabilize economic growth and bolster market confidence.
