In terms of the regional details, PMI data from China confirmed weak manufacturing confidence in the nation. The official NBS PMI for September rose marginally to 49.8 from 49.7, but remained in the contraction (sub-50) zone. The uptick was driven by improvement in production and new orders.
The Markit PMI reading was revised slightly upwards to 47.2 (compared to the flash estimate of 47.0), but it remains at a six-year low. On balance, the tepid PMI data reinforces their view of moderating growth in China and is in line with their lower, revised growth forecast for the year, says Barclays.
In the US, the ISM manufacturing index surprised on the downside, falling to 50.2 in September. The slowdown was broad-based; new orders declined to 50.1 - the lowest since December 2012 and production also slowed. Inventories were unchanged from August and consequently, the forward-looking new orders less inventory measure worsened to 1.6 in September from 3.2.
The weak print came in the wake of the sharp falls of some regional PMIs (Chicago, Milwaukee) into contractionary territory in September, which had been released earlier in the week. On the whole, factors such as lower energy prices, a stronger dollar and weak external demand are likely to keep the manufacturing sector under pressure in the near term, foresees Barclays.
