CHINA’S giant factory sector likely shrank for the second month in a row in September, a Reuters poll showed, a development that would add to fears of a sharper slowdown in the world’s second-largest economy.
The official manufacturing Purchasing Managers’ Index (PMI) is forecast to inch down to 49.6 from August’s 49.7, according to the median forecast of 29 economists in the poll.
August saw the deepest contraction in factory activity in three years and if the September number is 49.6, it would be the lowest since August 2012.
The weak PMI reading would strengthen bets that the government would roll out more support this year, including further cuts in interest rates, bank reserve requirements and higher infrastructure spending.
“Conditions remain weak in China’s economy but a sharper downturn would be unlikely thanks to government supportive policies,” said Hu Yuexiao, economist at Shanghai Securities in Shanghai.
Last week, a separate preliminary private survey showed flagging demand dragged China’s factory sector into its sharpest contraction in 6-1/2 years in September, fanning global concerns that the economy may be slowing more sharply than earlier feared.
A plunge in China’s stock market over the summer and a surprise devaluation in the yuan have roiled global markets. Despite of a raft of stimulus moves, including slashing interest rates five times since November, recent economic data suggested China’s economy lost further momentum over the summer.
The official PMI factory numbers will be released Thursday, Oct. 1, alongside the official services PMI. The Caixin/Markit manufacturing PMI (final) and its services PMI will be released on the same day.(SD-Agencies)
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