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Analysts at TD Securities note that China’s Caixin manufacturing PMI dropped to 50.0 in Sep, its lowest reading since May 2017.

Key Quotes

“This index is far more sensitive to export concerns and is reflective of smaller companies. Further pressure is likely over coming months as US tariffs bite. The official manufacturing PMI fell to 50.8, its lowest since Feb 2018, from 51.3 in Aug. Reflecting worsening trade tensions, new export orders fell to 48, its fourth consecutive contraction and lowest since 2016.”

“In contrast non-manufacturing PMI strengthened to 54.9 from 51.2 in August reflecting firm service sector conditions. Separately the PBoC on Saturday said it will maintain a prudent and neutral monetary policy stance while maintaining ample liquidity, implying further targeted easing. The data may fuel further pressure for a weaker CNY path in the weeks ahead though it is unlikely that China will revert to the fast pace of CNY depreciation seen over June.”