China\u2019s export orders shrank in September, adding to downward pressure on the world\u2019s No. 2 economy, two surveys showed<\/b>
\nTwo gauges of activity in China\u2019s manufacturing sector worsened in September, reflecting the nation\u2019s economic slowdown and fallout from the trade war with the US
The official manufacturing purchasing managers index stood at 50.8 in September versus 51.3 in August, lower than the median estimate of 51.2 in a Bloomberg survey of economists.
Meanwhile, the Caixin manufacturing PMI, which better reflects sentiment among smaller, private firms, declined to 50 from 50.6, the lowest since May 2017. A reading of 50 is the dividing line between expansion and contraction.
The lack of progress in negotiations between Washington and Beijing over their trade rivalry means that there is a good chance the current roster of tariffs on $250 billion of Chinese goods exported to the US will grow, as President Trump has threatened.
With little room for optimism on external demand, the outlook for China\u2019s economy hinges increasingly on the effectiveness of targeted stimulus measures being rolled out this year.
The gauge for new export orders in the manufacturing PMI report fell to 48, the fourth consecutive month of contraction and the lowest reading since 2016.
\u201cThe further slowdown in China\u2019s official manufacturing PMI in September reflects the intensifying impact of the US-China trade war on China\u2019s manufacturing export sector,\u201d said Rajiv Biswas, APAC chief economist at IHS Markit in Singapore.
\u201cThe near-term outlook for the Chinese manufacturing export sector remains weak, albeit the Chinese government may apply some further stimulus measures to support growth.\u201d
The official non-manufacturing PMI picked up to 54.9, signalling that domestic demand for services and construction remains strong enough to mitigate some of the external headwinds that the economy is facing, for now.
\u201cThe government\u2019s support policy will start to have an impact in the fourth quarter, which could offset the damage of the trade war,\u201d said Gao Yuwei, a researcher at Bank of China Ltd.\u2019s Institute of International Finance in Beijing.
\u201cThe efforts to shore up infrastructure investment has been driving up construction activity, and services industries normally perform better in the third and fourth quarter.\u201d
Bloomberg Economics early indicators on China\u2019s economy foreshadowed the pullback, showing that sentiment deteriorated in September. The report gives an advance picture of what\u2019s happening in China by aggregating the earliest-available indicators on business conditions and market sentiment.
That worsening follows on from a slowdown in industrial profit growth in August. Private companies fared worse than state-owned enterprises, but discrepancies in that data suggest that the picture for Chinese manufacturers may be worse than officially-reported growth rates show.
The official PMI report also indicates rising unemployment in the manufacturing sector, analysts including Wenqi Liu at China International Capital Corp. in Beijing., wrote in a note Sunday.
\u201cWe will continue to closely watch infrastructure and property investment growth, as they might lead the cyclical stabilisation,\u201d they wrote.
Officials have promised fiscal stimulus in the form of tax cuts and infrastructure spending to buffer the domestic economy somewhat from the effects of the trade dispute.
Analysts also expect China\u2019s central bank will continue topping up liquidity in the financial system to support economic growth.
Indexes for retail, telecommunications, IT and financial industries in the PMI report were all above 55, showing robust activity, whereas the transportation and real-estate-services readings signalled contraction, according to the National Bureau of Statistics. Construction activity quickened noticeably, it said.
That construction uptick, if sustained, could be a sign that the measures aimed at boosting infrastructure investment are starting to kick in.
\u201cThe trade war with the US has had a negative impact, but as China\u2019s reliance on trade has declined, the influence is manageable overall,\u201d said Wen Tao, an analyst with China Logistics Information Centre, according to a statement on its website.<\/p>\n

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