Chinese business activity growth slows at end of Q3
Staff Writer |
Caixin China Composite PMI data which covers both manufacturing and services signalled increased business activity for the seventh successive month in September.
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However, at 51.4 in September, down from August’s 51.8, the Composite Output Index indicated that the rate of expansion slowed to a three-month low. Latest survey data pointed to further growth of both manufacturing and service sector output at the end of the third quarter.
That said, the degree to which manufacturers raised production was the slowest in three months and only marginal. At the same time, growth in service sector business activity was little-changed from the previous month and modest overall
This was shown by the seasonally adjusted Caixin China General Services Business Activity Index posting 52.0 in September, down only fractionally from 52.1 in August. Higher business activity at services companies was generally linked to greater new order intakes and new project developments.
This was highlighted by a further increase in total new business during September. That said, the rate of new order growth remained moderate, despite quickening slightly since the previous month. Meanwhile, manufacturers signalled only a marginal increase in new order books.
Overall, composite new business increased for the seventh month in a row and at a modest pace. Service sector employment returned to growth in September. Although the rate of job creation was moderate overall, it was the first time that headcounts across the sector had increased since June.
A number of panellists mentioned adding to their payrolls to help with new projects. However, staff hiring at service providers could not offset further marked job cuts at manufacturing companies. Subsequently, composite employment declined for the sixteenth consecutive month, albeit only slightly.
Lower employment and further growth in new work contributed to a further rise in backlogs of work at Chinese manufacturers during September. In contrast, services companies noted a marginal drop in outstanding business for the fourth month in a row. Some service providers commented on efforts to reduce the amount of work-in-hand (but not yet completed) at the end of the third quarter.
At the composite level, the amount of unfinished work rose modestly over the month. September data indicated that average input costs rose across both manufacturing and service sectors. The rate of input price inflation accelerated across the manufacturing sector and was solid overall.
Meanwhile, services companies signalled a pace of increase that, though moderate, was the fastest recorded in three months. Stronger rates of cost inflation across both monitored sectors led composite input prices to rise at the quickest pace in five months. In line with the trend for costs, prices charged by manufacturers and service providers increased during September.
Goods producers noted a moderate rate of inflation, while services companies noted only a slight increase overall. Overall, data indicated that composite selling prices rose for the seventh month in a row and at a modest rate.
Service providers signalled a relatively cautious level of optimism towards future growth prospects in September. This was shown by the degree of positive sentiment declining from August and remaining well below the series average.
Confidence was mainly linked to hopes of improving market conditions and stronger underlying client demand. ■