On September 30, China's National Bureau of Statistics and Caixin released PMI data that provided insight into the economic situation at the end of the third quarter.

The Caixin Manufacturing PMI value slipped from 50.4 in August to 49.3 in September, signaling that the economy is once again in a contractionary phase. Manufacturing activity saw its largest decline since July 2023, according to the September survey results.

Manufacturers reported that new orders fell again, at the fastest rate since September 2022. New export orders also decreased. The decrease in orders led to the first decline in unfinished work since February 2024. Manufacturers reduced their workforce due to cost concerns and a pullback in demand.

Input prices also slipped as orders fell, with firms reducing ex-factory prices in an increasingly competitive environment. Confidence among manufacturing firms fell to its second-lowest level since April 2012

Key takeaways from the September survey showed that the unexpected contraction in China's manufacturing sector emphasized the need for government stimulus and central bank policy measures to shore up the economy. Last week, the People's Bank of China and the Politburo announced a series of measures to support the weak economy. Market expectations of a rebound in consumption have somewhat limited the impact of the September PMI data on market risk sentiment.

Investors need to assess the effectiveness of the latest policy measures in Q4 2024 economic indicators.

In an expert view on China's manufacturing sector, Dr. Wang Zhe, Senior Economist at Caixin Intelligence Unit, commented that the latest macroeconomic data were generally lower than market expectations, and that the lack of domestic effective demand remained prominent, with unemployment pressure and consumers' willingness and ability to consume being dampened.

Dr. Wang also mentioned that policy measures for the Chinese economy indicate that policies currently under development should take effect faster, while the need for additional policies is becoming more urgent. There is relatively ample policy space and fiscal and monetary policies should play a greater role in safeguarding people's livelihood, improving the job market and stimulating demand.

The Hang Seng Index rose 1.57% to 20,966 despite weaker-than-expected PMI data. In the foreign exchange market, the Australian dollar rose to a high of 0.69364 against the US dollar (AUD/USD) early on Monday. However, AUD/USD's reaction to the private sector PMI was volatile, falling to a low of 0.69139.