Sept manufacturing activity improves at fractional pace

Chinese manufacturers continued to see operating conditions improve at a fractional pace in September, adding to signs of weak growth momentum in the world's second-largest economy.

The HSBC/Markit China manufacturing purchasing manager's index (PMI), a key measure of factory activity in China, posted at 50.2 in September, down slightly from the earlier flash reading of 50.5, and unchanged from August's three-month low, data company Markit said Tuesday in a statement.

The PMI, which samples 420 small- and medium-sized manufacturing enterprises in China, signaled only fractional improvement in the health of the sector, it said.

A PMI above 50 percent indicates expansion, while a reading below 50 suggests contraction.

Chinese manufacturers saw further expansion of output in September, though the rate of growth eased from July's 16-month high and was the slowest in four months of expansion.

The growth was attributed to higher volumes of new work, as highlighted by a modest increase in total new business.

Data suggested that inflows of new work were largely driven by stronger demand from abroad, with new export orders rising at the fastest pace since March 2010, it said.

Improving economic conditions across a number of key export markets helped to boost China's new export business, according to Markit.

Despite higher volumes of new work, companies continued to cut staff in September at a modest pace. Lower work force numbers were attributed to a combination of downsizing policies and non-replacement of voluntary leavers.

Purchasing activity in China's manufacturing sector rose for the fifth month in a row during September, albeit at the slowest rate since June.

Manufacturers in China saw a second successive monthly fall in average costs in September. The rate at which input prices fell was the quickest since April. Output prices also declined in September, with a number of companies discounting their selling prices in an attempt to boost new business.

Overall, the data in September suggest that China's manufacturing activity continues to expand at a slow pace, said HSBC chief China economist Qu Hongbin.

"We think risks to growth are still on the downside and warrant more accommodative monetary as well as fiscal policies," he said.

On Wednesday, the National Bureau of Statistics (NBS) is scheduled to release the official September manufacturing PMI, which samples 3,000 enterprises of various sizes nationwide.