In contrast with the Caixin manufacturing PMI, official PMI manufacturing for September was slightly better than expected, rising to 49.8 from 49.7 in August (consensus: 49.7). The new orders index rose from 49.7 to 50.2. Hence, while still at a low level, the official PMI points to tentative signs of bottoming. This brings slight relief following the sharp decline in the Caixin. The final version of this index was also released today and was revised up to 47.2 from 47.0. The official PMI generally has smaller swings than the Caixin but the direction tends to be similar. Compared with the official PMI, the Caixin index generally captures more cyclical companies among small- and medium-sized companies.
On a less positive note, the Caixin service PMI fell further in September from 51.5 to 50.5 in August (no consensus estimate). It was the lowest level since July 2007. It is hard to know whether it is really a good indicator for the service sector as we have limited data for this part of the economy. However, on the margin, it is disappointing as China is increasingly looking for the service sector to drive growth.
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