A sub-index for new orders crept back towards the 50-mark that separates expansion from contraction

A sub-index for new orders crept back towards the 50-mark that separates expansion from contraction Photo: Reuters

CHINA'S manufacturing activity has continued to show signs of weakness in September, indicating Beijing's lacklustre effort to boost the economy has so far failed to arrest the slowdown.

Though the official Purchasing Manager's Index rebounded slightly in September to 49.8 after a 49.2 reading in August, it still hovered below the expansion threshold of 50, increasing market speculation that the Chinese economy may grow less than 7.5 per cent this year - the official government target.

August had marked the lowest reading since November 2011, as the world's second-biggest economy struggles against cooling exports, factory output and fixed asset investment.

''The data continues to reinforce the hard landing that we have predicted for China because this is the second consecutive month of a sub-50 reading,'' said Prakash Sakpal of ING in Singapore, which forecasts Chinese economic growth will be close to 7 per cent in both the third and fourth quarters of this year. ''September PMI readings are normally fairly strong and we don't see that this month is that much better than last month.''

ANZ's China chief economist Liu Li-Gang said as third-quarter GDP growth was likely to come in weaker than the second quarter's 7.6 per cent, and even lower than 7.5 per cent, ''we also see the likelihood of a policy rate cut by year-end.'' ANZ believes monetary easing and fiscal policy implementation could accelerate following the once-in-a decade party leadership change, which is scheduled to take place next month, ''in order to maintain social stability and stable political transition''.

A sub-index for new orders crept back towards the 50-mark that separates expansion from contraction, hitting 49.8, its highest point since May, while the output sub-index also strengthened to 51.3.

A private sector PMI survey published on Saturday by HSBC ticked up to 47.9 in September from a nine-month low of 47.6 in August, pointing to a month in which a slide in the rate of economic growth was halted but not reversed.