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China's Private Sector Growth Weakens In September

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China's private sector expanded at a slower pace in September driven by weaker increases in output at both manufacturing and services companies, survey data from IHS Markit showed Monday.

The Caixin composite output index rose dropped to a 3-month low of 51.4 in September from 52.4 a month ago. Nonetheless, a score above 50 indicates expansion in the sector.

The services Purchasing Managers' Index fell to 50.6 in September from 52.7 in August. The reading indicated only a marginal increase in services activity that was the slowest for 21 months.

"The Chinese economy generally held up well in the third quarter," Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group, said.

"However, the expansion in both manufacturing and services cooled in September, suggesting downward pressure on economic growth may re-emerge in the fourth quarter."

Data showed that overall weaker expansion in private sector coincided with a slowdown in new order growth across both monitored sectors.

At composite level, new work increased at the weakest pace since June. Manufacturers said new work logged the slowest growth in three months, while service providers reported a moderate upturn.

Goods producers signaled a further decline in employment, while services companies increased their staffing levels at a slower rate in line with the trend in new orders.

Services companies suggested only a marginal increase in cost burdens at the end of the third quarter, despite the rate of inflation picking up for the second month in a row. This contrasted with a sharp and accelerated rise in manufacturers' input costs.

Consequently, the rate of composite input price inflation quickened to an eight-month high.

Reflective of the trend for input costs, output charges set by services companies rose only slightly in September. Stronger cost pressures at manufacturers led factory gate charges to increase sharply as firms sought to protect their margins.

Selling prices at the composite level subsequently increased at the fastest pace since last December.

by RTT Staff Writer

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