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China’s economy continues to weaken in recent weeks
(MENAFN) Recent surveys released on Monday indicate that China’s economy has continued to weaken in recent weeks, prompting calls for increased government support as stimulus measures ramp up. The Caixin purchasing managers' survey highlighted a significant decline in new manufacturing orders, which fell at the fastest pace in two years during September. The report emphasized that operating conditions within the manufacturing sector had worsened after a brief improvement in August. Additionally, firms reported reductions in both hiring and purchasing activities, underscoring persistent concerns regarding insufficient domestic demand.
An official survey from the National Bureau of Statistics revealed a less severe decline, but it still marked the fifth consecutive month of contraction for the manufacturing sector. The purchasing managers' index (PMI) stood at 49.8 in September, showing a slight improvement from August's six-month low of 49.1. Notably, while the index remains below the 50-point threshold that indicates expansion, the survey indicated that factory output had increased even as new orders experienced a decline. This ongoing contraction highlights the challenges faced by the sector amidst mounting pressure on employment and weak consumer demand.
In response to these economic challenges, Chinese stock markets reacted positively on Monday, reflecting investor optimism over a series of policy measures announced in the previous week. These measures included reductions in interest rates, lowered down payment requirements for mortgages, and cuts to the required reserves held by banks. The announcements were met with enthusiasm, as market participants looked to the government's coordinated stimulus efforts to rejuvenate the economy.
The surge in stock prices was significant, with the Shenzhen Composite index skyrocketing by 8.2 percent and the Shanghai Composite index rising by 5.7 percent. Analysts like Tan Boon Heng from Mizuho Bank in Singapore noted that the decisive and coordinated nature of the policy responses from Beijing had understandably fostered a sense of optimism among investors, despite the underlying economic challenges. The market's positive response signals a cautious hope for recovery as the government works to stabilize the economy amidst ongoing uncertainties.
An official survey from the National Bureau of Statistics revealed a less severe decline, but it still marked the fifth consecutive month of contraction for the manufacturing sector. The purchasing managers' index (PMI) stood at 49.8 in September, showing a slight improvement from August's six-month low of 49.1. Notably, while the index remains below the 50-point threshold that indicates expansion, the survey indicated that factory output had increased even as new orders experienced a decline. This ongoing contraction highlights the challenges faced by the sector amidst mounting pressure on employment and weak consumer demand.
In response to these economic challenges, Chinese stock markets reacted positively on Monday, reflecting investor optimism over a series of policy measures announced in the previous week. These measures included reductions in interest rates, lowered down payment requirements for mortgages, and cuts to the required reserves held by banks. The announcements were met with enthusiasm, as market participants looked to the government's coordinated stimulus efforts to rejuvenate the economy.
The surge in stock prices was significant, with the Shenzhen Composite index skyrocketing by 8.2 percent and the Shanghai Composite index rising by 5.7 percent. Analysts like Tan Boon Heng from Mizuho Bank in Singapore noted that the decisive and coordinated nature of the policy responses from Beijing had understandably fostered a sense of optimism among investors, despite the underlying economic challenges. The market's positive response signals a cautious hope for recovery as the government works to stabilize the economy amidst ongoing uncertainties.
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