Workers sewing shoes at a factory in Qingdao in China’s eastern Shandong province.
AFP | Getty Images
China said on Monday that manufacturing activity in the world’s second-largest economy contracted for the fifth straight month.
The official Purchasing Managers’ Index (PMI) was 49.8 in September — slightly exceeding the 49.5 that analysts polled by Reuters had expected. The official PMI data came in at 49.5 in August.
PMI readings above 50 indicate expansion, while those below that level signal contraction.
That latest PMI reading “continues to show that the Chinese economy is going through both a structural and a cyclical slowdown, particularly in the manufacturing sector which is being hit by various headwinds,” Cedric Chehab, global head of country risk at Fitch Solutions, told CNBC’s “Street Signs Asia.”
Challenges faced by the country’s manufacturers include a tightening of financing conditions domestically and the U.S.-China trade war, he added.
A private survey of China’s manufacturing activity, the Caixin/Markit factory Purchasing Managers’ Index (PMI), is also scheduled for release on Monday. Analysts polled by Reuters expect the data to come in at 50.2 for September, down slightly from 50.4 in August.
The official PMI survey typically polls a large proportion of big businesses and state-owned enterprises. The Caixin indicator features a bigger mix of small- and medium-sized firms.
The PMI is a survey of how businesses view the operating environment. Such data offer a first glimpse into what’s happening in an economy, as they are usually among the first major economic indicators released each month.
The China PMI is closely watched by global investors for signs of trouble amid a domestic economic slowdown and the ongoing U.S.-China trade dispute.
— This is breaking news. Please check back for updates.