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HSBC: September China growth disappoints

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Employment becoming a concern.

According to HSBC, another month of near stagnant business activity was reported at China’s factories in September.

Disappointingly weak growth of output and new orders caused firms to cut staff numbers at a faster rate than the prior month in an attempt to scale back capacity and cut costs. Prices meanwhile fell at an increased rate, in part due to more aggressive price discounting in the face of weak sales. More positively, export orders showed the largest monthly gain since early-2010.

"Output grew only modestly, expanding at a rate unchanged on August."

The flash HSBC Manufacturing PMI, compiled by Markit, rose from 50.2 in August to 50.5 in September. With the index only marginally above the 50.0 no- change level, the survey pointed to another month of almost no growth of business activity in the goods-producing sector.

Output grew only modestly, expanding at a rate unchanged on August, reflecting another month of weak inflows of new orders. Although growth of new orders picked up slightly, largely driven by an upturn in foreign demand, the overall improvement in order inflows remained disappointingly weak as a result of lacklustre domestic demand.

Manufacturers consequently continued to focus on cost cutting, resulting in the largest monthly reduction in headcounts since February 2009, when employment was being slashed at the height of the financial crisis.

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