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China’s manufacturing surveys show mixed results

The end-of-month activity surveys for Chinese manufacturing produced slightly different outcomes for September.

However, they were issued on Monday—nearly a week after China began releasing a series of stimulus measures, making the results of the two surveys—private and official—somewhat outdated.

Investors largely ignored the survey outcomes, refocusing their attention on the stimulus measures, especially the assistance outlined on Sunday for property buyers, owners, and property companies by the People’s Bank of China.

These announcements helped propel the Shanghai market up 6% during the morning to mid-afternoon sessions. The CSI 300 index of blue chips performed even better, jumping more than 7%, while the Hang Seng in Hong Kong gained over 3%.

On one hand, the official survey from the National Bureau of Statistics showed a slightly better outcome for manufacturing at 49.8—though this marked the fifth consecutive month of contraction.

This was an improvement compared to readings of 49.1 in August, 49.4 in July, and 49.5 in June.

On the other hand, the official survey of non-manufacturing (covering the large services sector) showed a softer outcome at 50—indicating no growth or contraction—down from an expansionary reading of 50.3 in August.

In contrast, the private survey from the Caixin group indicated a dip into contraction for manufacturing, with a reading of 49.3, down from 50.4 in August. The non-manufacturing reading also fell significantly to a still-expansionary 50.3, down from 51.6 in August—a surprising drop, as the market had anticipated an outcome around 51.

The official survey focuses on larger companies, many of which are state-controlled, while the Caixin survey examines small to medium-sized enterprises in the private sector.

Despite the differing results, the surveys are likely to be overlooked amid the stimulus-backed market surge, as they were conducted before China launched its stimulus packages last week and the support measures aimed at assisting listed companies, investors, homeowners, and property firms. Interest rates for both new and existing mortgages have been cut and will continue to be reduced.

Restrictions on property ownership are being lifted, and property companies will find it easier to access supportive financing and assistance from governments and banks for at least the next two years.

China is currently on a week-long holiday for National Day (October 1), marking the country’s 75th birthday. This timing may explain why President Xi Jinping and the Politburo finally decided to roll out a series of stimulus and support measures—particularly for the struggling property sector.

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