China's manufacturing sector is showing few signs of recovery as factory activity likely shrank for the sixth month in a row this September, keeping alive concerns about the world's second-largest economy.
Economists say the slowdown adds more pressure on Beijing to introduce stronger support measures, especially with no trade breakthrough in sight with the United States.
A Reuters poll of 32 economists predicted the official purchasing managers' index (PMI) would rise slightly to 49.6 in September from 49.4 in August.
However, the number remains below the 50 mark that separates growth from contraction. The official data will be released Tuesday. The extended slump reflects weak demand at home and the lasting hit from US tariffs.
The forecasts vary widely. Malaysia's Maybank Investment Bank expects the index to hold steady at 50.0, while Pantheon Macroeconomics projects a deeper dip to 49.0. Most analysts agree the figures point to a fragile recovery at best.
Government steps to lift consumer spending, including subsidies on household loans introduced in August, have had limited effect.
China's factory activity probably shrank for a sixth straight month in September, keeping alive calls for more stimulus in the world's second-largest economy to fend off a sharp slowdown as a U.S. trade deal remains distant. https://t.co/0qkRBUU9ZO
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China Keeps Rates Steady as US Fed Eyes Cuts
Factory output and retail sales both posted their weakest growth in a year, raising worries about how long the economy can keep its footing without broader stimulus.
Pan Gongsheng, governor of the People's Bank of China, stressed last week that the central bank still has tools to help the economy if needed.
But unlike the US Federal Reserve, China has not cut interest rates, a move some experts thought was possible.
Officials point to steady exports and a rallying stock market as signs of resilience.
Exports to India hit a record in August, and shipments to Africa and Southeast Asia remain strong.
Yet the US still towers over all other markets, buying more than $400 billion worth of Chinese goods each year, SRN said.
Trade tensions with Washington continue to weigh heavily. Chinese President Xi Jinping spoke by phone with US President Donald Trump on September 19, the first direct contact in three months.
Talks last week again stalled over technical details, dampening hopes of a near-term agreement.
Economists also forecast the private-sector RatingDog PMI to fall to 50.2 in September from 50.5 a month earlier.
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