While manufacturers in China managed to keep production in expansion mode by working through their backlogs, optimism levels eased noticeably in the latest survey period. Furthermore, firms lowered their hiring and purchasing activity.

The slowdown in demand led to a fall in average input prices, further contributing to reduced charges in September. Export charges also eased as competition intensified.

The headline seasonally-adjusted Caixin China purchasing managers’ index (PMI)—a composite indicator designed to provide a single-figure snapshot of operating conditions in the manufacturing economy—fell to 49.3 in September, down from 50.4 in August.

Below the 50 neutral mark, the data signalled that conditions in the manufacturing sector deteriorated following a brief improvement in August. While marginal, the rate of decline was the fastest since July last year, a release from S&P Global Market Intelligence said.

Incoming new orders for Chinese manufactured goods declined at the fastest pace since September 2022, attributed to falling underlying demand, heightening competition and subdued market conditions. This included export orders, with softening economic conditions abroad negatively affecting foreign demand.

Overall confidence was affected by concerns over the global economic and trade outlooks. Optimism levels at Chinese manufacturers slipped to the second lowest recorded since data collection for this series began in April 2012. Firms also lowered headcounts amid reduced workloads and cost concerns.

Purchasing activity, meanwhile, declined amid reduced new work inflows and with adequate inventory holdings. In fact, the slowdown in production growth resulted in pre-production inventory holdings rising for a second successive month in September.

Stocks of finished goods accumulated as well owing to outbound shipping delays and as new orders fell. Supply constraints and shipment delays led to another slight lengthening of lead times for the delivery of inputs to Chinese manufacturers.

The broad reduction in market demand also affected prices.

Fibre2Fashion News Desk (DS)