China’s earliest economic indicators hinted that growth continued to moderate in September as official drives to curb debt risk and clear the skies weighed on activity.
A gauge of activity at small companies edged down and an index of sales-manager sentiment weakened. The outlook was brighter elsewhere as a private steel-industry gauge jumped to a 12-month high amid price gains spurred by government curbs on output, and satellite images of manufacturing facilities showed activity was the strongest in six months. International investor confidence in the Chinese outlook improved in September.
The world’s second-biggest economy has shown signs of cooling in July and August after starting the year with a better-than-expected expansion. Headwinds include anti-pollution measures mandating plant closures coupled with a drive to cut excess capacity, and a push to rein in debt.
The first official indicator for September, the manufacturing purchasing managers index, is due for release Saturday. Economists project it edged down to 51.5 from 51.7 in August, according to a Bloomberg survey as of late Thursday.
The S&P Global Platts China Steel Sentiment Index climbed to a one-year high of 60.9 this month, according to survey of 75 to 90 China-based market participants including traders and steel mills. Readings above 50 signal expansion.
September is typically a stronger month for steel as construction picks up and inventory stocking begins ahead of October holidays, Paul Bartholomew, senior managing editor of steel and raw materials for S&P in Melbourne, wrote in a report. China produces more than half the world’s crude steel, which means rising prices could support global inflation.
“This year is more buoyant than usual,” he said. “Prices have hit four- or five-year highs and the upcoming 19th Party Congress in Beijing could result in some production curtailments and tighten up supply.”
The Standard Chartered China Small Medium Enterprises Confidence Index edged down to 56.2 from 57.4 in August, according to the bank’s survey of more than 500 companies. Three sub-indexes gauging current performance, expectations and credit all eased, while higher raw-material prices impeded inventory restocking and eroded profitability, the bank said.
“Production momentum stayed positive on solid demand” while investment appetite weakened slightly, economists Shen Lan and Ding Shuang wrote in a report.
Sentiment among sales managers eased to the second-lowest value in the past 11 months, according to a survey by London-based World Economics Ltd. It said a staffing index reflects a “flat job market” while the gauge of prices charged was stable for a third straight month.
“Data shows that the Chinese economy continued to grow in September but at a slower rate than has been the case for some time,” the report said. “Companies have been lowering capital expenditure, inventories of stock, and limiting their exposure to underperforming accounts to increase their capacity against possible coming risks and future challenges.”
The China Satellite Manufacturing Index strengthened to a six-month high of 51.7 from 51.2 in August. The gauge published by San Francisco-based SpaceKnow Inc. monitors commercial satellite imagery to gauge activity levels across thousands of industrial sites.
International investor confidence in the Chinese outlook improved in September, according to a survey of the China Economic Panel, a joint project of The Centre for European Economic Research in Mannheim, Germany, and Fudan University in Shanghai.
The index, reflecting global investors’ expectations for the country’s macroeconomic development over the next 12 months, rose to 8.3 from zero in August.
The forecasts for China’s gross domestic product growth for 2018 also climbed to 6.7 percent from the current reading of 6.6 percent.