The Caixin Flash China General Manufacturing PMI declined once again, falling from 47.3 in August to 47.0 in September. This continued to be the lowest level since March 2009. The Chinese manufacturing sector continues to struggle, with its PMI data contracting for the seventh consecutive month. Manufacturing activity was down across-the-board, including new orders (down from 46.6 to 46.0), output (down from 46.4 to 45.7), exports (down from 46.6 to 45.8) and employment (down from 46.7 to 46.5). The new orders figure declined at its fastest pace since November 2011. Indeed, fixed asset investment has slowed from 11.2 percent year-over-year in July to 10.9 percent in August, or down from 16.5 percent twelve months ago. On a somewhat better note, industrial production (up from 6.0 percent year-over-year to 6.1 percent) and retail sales (up from 10.5 percent year-over-year to 10.8 percent) each edged higher for the month, even as they remained slower than at the end of 2014.
With that in mind, the Bank of China has devalued the yuan, down 2.8 percent since early August, and the Shanghai Composite Stock Market Index has plummeted nearly 40 percent since June 12. Such sharp moves have prompted growth worries in financial markets around the world.
In contrast to the challenges in China, the economies in Europe appear to be moving in the right direction. The Markit Flash Eurozone Manufacturing PMI declined from 52.3 in August to 52.0 in September, but the underlying data point to notable progress since the sector was essentially stagnant in November (50.1). Despite these gains, many of the key indicators eased a bit in September, even as they suggested modest growth overall. This included new orders (down from 52.8 to 52.6), output (down from 53.9 to 53.5), exports (down from 52.4 to 52.1) and hiring (down from 52.0 to 51.5). This release also featured mixed news on two important countries on the continent, with Germany (down from 53.3 to 52.5) decelerating slightly and France (up from 48.3 to 50.4) expanding slightly for only the second time in the past 16 months.
Closer to home, the Markit Flash U.S. Manufacturing PMI was unchanged at 53.0 in September, the slowest pace since October 2013. Overall, manufacturers continue to grow modestly, but a number of headwinds have dampened activity from a more-robust expansion seen as recently as six months ago. Specific to the September data, output (up from 53.7 to 54.3) and exports (up from 49.8 to 50.6) accelerated a bit, but new orders (down from 54.7 to 54.0) and hiring (down from 52.2 to 51.4) each slowed somewhat. Exports expanded for only the fourth time so far this year, as the stronger U.S. dollar and sluggishness in export markets have hurt manufacturers’ ability to increase their international sales. However, demand and production growth remains decent, albeit at rates that are less-than-desired.
Final PMI data releases for each of these reports will come out on Wednesday, October 1.
Chad Moutray is the chief economist, National Association of Manufacturers.
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