China May Need Further Stimulus If Economic Indicators Remain Subdued: MIDF
China’s factory activity shrank for a fifth straight month and the services sector slowed sharply in September, suggesting Beijing will need even more stimulus to hit its 2024 growth target with only three months left in the year. The National Bureau of Statistics (NBS) purchasing managers’ index (PMI) released on Monday nudged up to 49.8 in September from 49.1 in August.
The manufacturing PMI published by the National Bureau of Statistics (NBS) rose more than expected to 49.8 (Aug-24: 49.1), signalling 5th month of contraction but at slower pace due to pick-up in output and slower fall in new orders. Meanwhile, the Caixin manufacturing PMI fell sharper than expected to 49.3 (Aug-24: 50.4), turning to contraction weighed down by weak demand from both domestic and foreign markets and declines in employment and purchasing activities. Apart from the weak factory activities, services sector activities expanded at slower pace in Sep-24 with the NBS and Caixin PMIs for the sector falling to 50.0 (Aug-24: 50.3) and 50.3 (Aug-24: 51.6), respectively.
Apart from weaker new orders, sentiment among service providers also weakened during the month. MIDF in its view the weaker PMI readings to support the recent stimulus measures introduced by the national authorities. Nevertheless, further indication of weaker economic activities may require more policy interventions to encourage demand and improve the economic momentum and to ensure the +5% growth target for this year will be achieved.
