China's manufacturers suffered a sharp drop in new export orders during September, with HSBC's latest Purchasing Managers' Index™ revealing orders contracted at their fastest rate for 42 months.
Companies blamed the tough global economic environment for the swift contraction in orders. Staff numbers and output levels across the industry also fell, ensuring September's PMI™ reading of 47.9 remains well below 50 – the level which indicates the transition from contraction to expansion.
The index is compiled using the views of senior purchasing executives in more than 430 companies across the country and is seen as a significant indicator to the health of China's manufacturing industry.
Although September's PMI reading was actually marginally up on August's figure of 47.6, it represents the 11th successive month-on-month deterioration in the Chinese manufacturing industry.
"Manufacturing growth is likely to be bottoming out," believes Qu Hongbin, HSBC's Chief Economist for Greater China and Co-Head of Asian Economic Research.
"However, the sharper contraction of new export orders and the lingering pressures on job markets mean that Beijing should step up easing to support growth and employment."
The next clues to the state of China's manufacturing industry will come on 24 October when the HSBC Flash PMI is released. This will be made available from 09:45 Beijing time – earlier than previous releases to allow market players swifter access to the data.
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