**China’s factory activity growth unexpectedly softened in September as a resurgence of Covid-19 disrupted production and weighed on consumer spending, a private sector survey showed Monday.**
The Caixin/Markit manufacturing purchasing managers’ index (PMI), a measure of manufacturing activity in China, fell to 49.6 in September from 50.4 in August, slipping below the 50-point mark that separates expansion from contraction.
The reading was the weakest since April and missed economists’ expectations for a reading of 50.0, according to a Reuters poll.
The Caixin PMI survey focuses on smaller, privately owned businesses, which are more vulnerable to economic shocks than the larger, state-owned companies that are included in the official PMI survey released last week.
The official PMI rose to 50.1 in September, showing a modest expansion in manufacturing activity. However, economists warned that the Caixin PMI’s contractionary reading suggests that the recovery in China’s manufacturing sector may be losing steam.
**The Caixin PMI’s sub-index for production fell to 49.5 in September from 52.0 in August, indicating a slowdown in factory output. The sub-index for new orders also declined, falling to 49.2 from 51.7, pointing to weaker demand for manufactured goods.**
The survey also showed that employment in the manufacturing sector continued to contract, with the sub-index for employment falling to 47.7 in September from 48.0 in August.
**The Caixin PMI’s findings are consistent with other recent data that have pointed to a slowdown in China’s economy. **Retail sales growth slowed to 2.5% year-on-year in August, the weakest pace since May 2020, while industrial production growth decelerated to 4.2% year-on-year in August, the slowest pace since March 2020.
**The economic slowdown has been attributed to a combination of factors, including the resurgence of Covid-19, the property market downturn, and weak consumer spending. **The government has introduced a series of measures to support the economy, including interest rate cuts, fiscal stimulus, and infrastructure investment. However, it remains to be seen whether these measures will be enough to offset the headwinds facing the economy.
**The Caixin PMI survey is a closely watched indicator of manufacturing activity in China. **The survey is conducted by Caixin Media, a Chinese financial news and information provider, and Markit, a global provider of financial information services.
**The survey is based on responses from over 500 manufacturers in China and is released on a monthly basis. **The PMI is a composite index that is calculated using a weighted average of five sub-indexes: new orders, production, employment, suppliers’ delivery times, and stocks of finished goods.
A reading above 50 indicates expansion in manufacturing activity, while a reading below 50 indicates contraction. **The PMI is a widely used measure of manufacturing activity and is used by economists, businesses, and investors as a gauge of the health of the Chinese economy.**.
