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More manufacturing trouble for China

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China PMI hits 78-month low.

The much-feared slowdown in China manufacturing accelerated in September, according to a closely-watched measure of the country’s manufacturing activity.

The principle reason for the weakening of manufacturing is tied to previous changes in factors related to external demand and prices.

The Caixin Flash China General Manufacturing PMI fell to its lowest level in 6 ½ years in September, declining from 47.3 in August to 47.0 this month.  Of the ten components of the PMI, seven were negative, including output, new orders, export orders, output prices and quantity of purchases.

Despite the downbeat results, Dr. He Fan, Chief Economist at Caixin Insight Group, urged caution.

“The decline indicates the nation’s manufacturing industry has reached a crucial stage in the structural transformation process.

“Overall, the fundamentals are good. The principle reason for the weakening of manufacturing is tied to previous changes in factors related to external demand and prices. Fiscal expenditures surged in August, pointing to stronger government efforts on the fiscal policy front. Patience may be needed for policies designed to promote stabilization to demonstrate their effectiveness.”

 

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