China’s manufacturing sector hit a six-year low according to economic data released Thursday.
While the news accentuated the growing theme of an economy slowing down faster than expected, China’s premier said, don’t worry, the country will still hit its economic targets for the year.
The Caixin China Purchasing Managers’ Index fell to 47.2 in September, down from 47.3 in August. It was the lowest reading since March 2009. A reading above 50 points signifies business growth, while anything below 50 signifies contraction.
Sub-indexes of the manufacturing PMI indicated new factory orders contracted month-on-month at the fastest rate in more than three years, in part due to a steep decline for overseas orders, reported Caixin. Reduced demand led to inventories of finished goods posting their biggest jump in three years.
The latest manufacturing PMI “indicates continued weakness for the manufacturing industry, although the pressure driving the sector’s decline has eased,” said Dr. He Fan, chief economist and director of research at Caixin Insight Group, a financial data and analysis platform that complements Caixin Media’s news services. “Tepid demand is a main factor behind an oversupply of manufacturing, and why it has not recovered”
The service sector also fell for a second consecutive month to 50.5, its lowest rate since July 2014, from 51.5 in August.
Still, Premier Li Keqiang said Wednesday that China’s economic growth remained in a “reasonable range” and would hits its main economic targets of around 7% growth this year.
Also, Wednesday, the World Economic Forum said the economy’s decline was inevitable, predictable and entirely normal. It added that it was unlikely the economy would hit a hard landing.
“There are signs that the government has been preparing for the economy’s new phase and has been recalibrating its growth objectives from the quantitative to the qualitative,” said the Global Competitiveness Report 2015-2016 released by the World Economic Forum on Wednesday