BEIJING (Reuters) – China’s manufacturing activity fell sharply in September as new orders at home and abroad cooled, dragging down factory owner confidence to near record lows, a private sector survey showed on Monday.
The Caixin/S&P Global Manufacturing PMI fell to 49.3 in September from 50.4 the previous month, missing analysts’ forecasts in a Reuters poll of 50.5. The reading was the lowest since July last year.
Chinese authorities unveiled aggressive stimulus last week, cutting interest rates and injecting liquidity into the banking system, as Beijing sought to pull economic growth back toward this year’s target of around 5%.
In an unusual September Politburo meeting focused on macroeconomic issues last week, China’s top leader acknowledged the economy was facing “new problems” and called for new policies to more “vigorously” stimulate growth.
Although production increased for the 11th consecutive month in September, order intake fell significantly from August. The sub-index for new orders was the lowest in two years.
While exports have been a bright spot for the economy, new orders from abroad fell at the fastest pace since last August. Chinese manufacturers said a deterioration in overseas demand led to a drop in export orders.
The US has implemented sharp tariff increases on Chinese products, including electric vehicles (EVs), and the EU is expected to make a final decision on potential EV tariffs soon.
Overall confidence was affected by concerns over the global trade outlook. Manufacturers’ optimism fell to the second-lowest level since data collection began in April 2012. Confidence bottomed out in June 2019 during the Trump administration’s China-US trade crackdown.
The decline in demand led to a drop in average input prices, which further contributed to reduced fees in September. Export duties also eased as competition intensified.
Companies also reduced headcount due to reduced workloads and cost concerns. The number of jobs was the fastest in five months.
The Caixin survey is believed to include smaller, export-oriented companies.
(Reporting by Ellen Zhang and Ryan Woo; Editing by Sam Holmes)