China Flash PMI worst since GFC

Activity in China’s manufacturing sector dropped to its lowest level since the Global Financial Crisis in September, according to a key index.

CNBC reports that the Caixin preliminary manufacturing index (Flash PMI) for September was 47, a drop from the August figure of 47.3 and the lowest reading for six and a half years.

Figures above 50 indicate expansion in the sector, while figures under 50 indicate contraction.

Commenting on the result, Caixin chief economist He Fan said the poor result reflects the fact that recent fiscal stimulus measures undertaken by Beijing have not yet had their intended effect.

"The decline [in manufacturing activity] indicates the nation’s manufacturing industry has reached a crucial stage in the structural transformation process," Dr He said.

"Fiscal expenditures surged in August, pointing to stronger government efforts on the fiscal policy front."

Most sub-indexes, including factory output, new orders, employment and output prices, also fell at a faster rate than last month.

According to the ABC, HSBC's Julia Wang wrote in a note on the data – "Although the overall economy remains weak, the index's focus on export-oriented sectors had been the biggest reason behind its decline in recent months."

"This will likely weigh on manufacturing sector output as well as investment, as well as further adding to disinflationary pressures," she added.

According to the Business Spectator, the news prompted a drop in the Australian Dollar – from US70.85c to US70.25c in less than a minute.

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