"China's factory sector grew only slightly in September as domestic demand faltered, a private survey showed, an unexpectedly weak outcome that suggests a firm rebound in Asia's economic powerhouse still remains elusive.
The final HSBC Purchasing Managers' Index (PMI) edged up to 50.2 from August's 50.1, figures on Monday showed.
Although a five-month high and showing the sector was growing, the survey was disappointing for investors as it was well below last week's flash reading of 51.2, with domestic orders weaker than preliminary estimates suggested.
New export orders picked up the slack, climbing to 50.7 from 47.2 in August to be above the 50-point mark separating expansion from contraction. After seasonal adjustments, however, the expansion was slight, HSBC said.
The Australian dollar, a proxy for growth in the world's second-largest economy, fell a quarter of a cent on the disappointment that activity was not as strong as hoped.
"The final reading was weaker than the flash and it showed that activity has weakened in the last 10 days," said Tao Wang, an economist at UBS in Hong Kong, adding a rebuilding of stocks by firms that had led the economic pick-up was slowing.
The softer-than-expected final HSBC PMI reading was in line with investor bets that China's economy is stabilizing, even if the revival is feeble and perhaps short-lived. Indeed, parts of the PMI poll suggested the economy is not out of the woods.
Factories cut jobs for the sixth consecutive month in September. And although output and new orders grew in September, HSBC noted the expansion was fractional after seasonal adjustments. In fact, it said some firms reported a contraction in output, citing unstable economic conditions.
"Growth is bottoming out on Beijing's mini-stimulus," Qu Hongbin a HSBC economist said, noting however that growth in domestic demand was unchanged from August.
Beijing's support and firmer growth in the United States, China's second-biggest export market, have put a floor beneath China's economy, which has slowed in 12 of the last 14 quarters".
Source: Reuters
