* Caixin manufacturing PMI hits lowest since March 2009
* Export orders at slowest in over six years
* Services sector, lone bright spot, cools markedly
* Readings likely to fuel hard landing fears, market
* Reinforces views more stimulus will be announced soon
BEIJING, Oct 1 China's factory activity fell to
a more than 6-year low in September while growth in the
once-resilient services sector came close to stalling, private
surveys showed, fueling fears that the economy may be slowing
more sharply than expected.
The services sector has been the lone bright spot in the
world's second-largest economy, helping to offset stubbornly
weak factory performance, but it too has begun to show signs of
fatigue in recent months, putting global financial markets on
Factory activity shrank to 47.2 in September, the lowest
reading since March 2009 and slightly weaker than 47.3 in
August, the final Caixin/Markit China Manufacturing Purchasing
Managers' Index (PMI) showed on Thursday.
A similar survey for services fell for a second consecutive
month to 50.5, its lowest since July 2014 and barely above the
50-mark which separates contraction from growth on a monthly
basis. The August reading was 51.5.
"This indicates the continued weakness of the manufacturing
industry, though the pressure driving the sector's decline has
eased," said He Fan, Chief Economist at Caixin Insight Group.
"Tepid demand is a main factor behind the oversupply of
manufacturing and why it has not recovered," said He.
Despite a steady stream of government stimulus measures over
the last year, including five interest rate cuts since November,
factory activity in China has now shrunk for seven straight
months, and more weakness is expected despite heading into what
should be the peak year-end shopping season.
New export orders fell at a faster rate in September,
sliding to 44.6 - a low not seen since March 2009 - and well
below August's 46.6.
The overall new orders sub-index, a proxy for domestic and
external demand, saw its sharpest contraction since August 2012.
A summer plunge in China's stock market and a surprise
devaluation in the yuan last month have roiled global
markets, and raised doubts inside and outside China over
Beijing's ability to manage its economy.
Still, most independent analysts, do not believe the economy
is heading for a hard landing just yet. Many economists forecast
a gradual though at times bumpy slowdown as Beijing tries to
overhaul its old 'heavy industry and export' model into a more
nimble one which is more reliant on services and stronger
JOBS PICTURE GETTING MURKIER
The health of the labour market could be key in determining
how much more stimulus authorities will deploy in coming months.
With sales weakening, manufacturers shed jobs for the 23rd
month in September and at the fastest pace since January 2009.
Companies in the services sector, however, continued to
hire. Despite a softening in new orders, their business
expectations remained high.
Tens of millions of Chinese were thrown out of work during
the last global crisis, alarming the stability-obsessed
Communist Party. The current downturn has not produced evidence
of mass layoffs so far, though tales abound of "zombie"
factories keeping workers on payrolls at subsistence wages.
China is due to release third-quarter GDP data on Oct 19,
and many economists expect growth to dip to below 7 percent,
which would be the slowest performance since the global
Many market watchers suspect current growth is already much
weaker than official data suggest, pointing to weak electricity
usage, sluggish freight volumes and the growing number of
Western firms reporting flagging China sales.
Official data released by China earlier on Thursday showed
factory activity shrank for a second month, while services
growth held steady from August.
The official data focuses on larger, state-owned firms,
while the private survey tends to concentrate on small-and
mid-sized companies which are facing more financial strains.
(Reporting By Xiaoyi Shao, Winni Zhou and Kevin Yao; Editing by