Daily Insight China drags global manufacturing
Group Economics Macro & Financial Markets Research Arjen van Dijkhuizen, Maritza Cabezas & Aline Schuiling +31 20 343 5616
2 October 2015
China’s manufacturing PMIs still below 50 but stabilising, while divergence in Services PMIs widens US manufacturing at slowest pace in two years Slowdown in eurozone manufacturing limited by robust domestic demand
Chinese Manufacturing PMIs still below 50, but stabilising
US manufacturing at slowest pace in two years
China’s PMI data for September published on Thursday
September’s US manufacturing expanded at the slowest pace
showed a mixed picture. Caixin’s Manufacturing PMI came in
in two years. The ISM declined to 50.2 from 51.1 in August.
at 47.2, a touch better than the flash number (and consensus
This confirms the tepid growth of a sector that is being
forecast) of 47 and just below the August reading of 47.3. Still,
severely hit by a strong dollar and the negative impact from
this index is at its lowest level since March 2009, confirming
declining investments in the energy and mining sectors. Indeed
the weakness in China’s industry, which is faced with
the weakness was widespread. Forward looking indicators,
overcapacity and subdued domestic and external demand. In
including new orders decreased by 1.6ppts from 51.7 in
contrast, NBS’ Manufacturing PMI rose marginally to 49.8
August. The uncertainty in the global economy, maintained
(consensus 49.7, in line with the August figure). The NBS
new export orders unchanged at 46.5. Meanwhile, the
index includes the larger (state) enterprises that more directly
employment index fell to 50.5 from 51.2 the previous month.
feel the support of the government’s general easing measures.
Most manufacturing related data has been pointing to weakness, in contrast to the other US economic data which
Caixin’s Services PMI at 14-month low, NBS’s solid at 53.4
remains strong. We think that US manufacturing activity will
Caixin’s Services PMI fell to a 14-month low of 50.5 (August:
remain subdued in the coming time.
51.5), although remaining above the neutral 50 mark. Still, the employment sub-index improved, illustrating the strength of the
Eurozone manufacturing also slowing down
services sector in creating jobs. However, Caixin’s composite
The final estimate of eurozone manufacturing PMI was
output index reached the lowest level since 2009. Meanwhile,
unchanged from the flash estimate; a decline to 52.0 in
NBS’ non-manufacturing PMI was more resilient, staying at a
September from 52.3 in August. Although at its current level
solid 53.4. All in all, while services continue to hold better than
the PMI is still consistent with expansion of the industrial
industry, there is a risk that the weakness broadens. We still
sector, it suggest the sector has lost some momentum. Indeed,
expect the government to add monetary and fiscal stimulus to
the details of the report reveal that the new export orders
keep China’s slowdown gradual. The government has for
component fell in September (to 52.1, down from 52.6 ), while
instance just halved the sales tax on small cars.
the orders-to-stocks ratio edged lower to 1.08 from 1.10. That said, the eurozone’s industrial sector is being supported by the
China’s manufacturing PMIs point to stabilisation
weak euro and the strength of domestic demand, which is compensating part of the slowdown in foreign demand. Indeed,
index
60
the total orders component fell only marginally in September,
58
despite the decline in export orders. The same picture was
56
painted by Germany’s factory orders for August, which were
54
published earlier. Total orders fell by 1.4% mom, with domestic
52
orders rising by 4.1%, orders from other eurozone countries
50
rising by 2.2% and orders from the rest of the world dropping by 9.5%.
48 46 11
12 13 Caixin Manufacturing PMI NBS Manufacturing PMI
Source: Thomson Reuters Datastream
14 15 Caixin Services PMI NBS Non-manufacturing PMI