China's Factory Activity Contracts for Fifth Consecutive Month, Services Sector Slows Down - More Stimulus Needed to Achieve 2024 Growth Target
In a recent report by the National Bureau of Statistics (NBS), China's factory activity in September continued to shrink for the fifth month in a row. The Purchasing Managers' Index (PMI) increased slightly to 49.8 from 49.1 in August, but still below the 50-mark indicating contraction. This data, along with a downbeat private-sector Caixin survey, highlights the challenges faced by China's manufacturing industry and the need for additional stimulus measures.
The services sector also showed signs of cooling down, with the non-manufacturing PMI dropping to 50.0 in September, the lowest in 21 months. The services PMI fell to 49.9, marking the first contraction since December last year. However, the construction PMI saw a slight increase to 50.7.
To address these issues, the central bank and financial regulator announced new measures, including lowering mortgage rates for existing home loans and launching an aggressive stimulus package. Additionally, China plans to raise funds through special bonds to boost consumer goods replacement programs and help local governments manage their debt.
Despite these efforts, analysts believe that more stimulus and a new fiscal package totaling around 2 trillion yuan may be needed to achieve the targeted "around 5%" growth. However, challenges such as weak demand and a challenging global trade environment still persist.
In conclusion, the current economic data from China suggests a need for continued government intervention to support growth and address key issues affecting the economy. Investors and individuals should stay informed about these developments as they can have a significant impact on financial markets and personal finances.