China’s flash mfg PMI contracts further

China's flash manufacturing PMI for September came in at 47, which is recorded 47.3 in previous month. The manufacturing PMI posted lowest reading and seventh consecutive month in contractionary territory. The data highlights the challenging economic backdrop for China. 

The labour market is coming under increasing stress on a variety of indicators-the Labour Demand/Supply ratio of 1.06 in Q1 was the lowest level since Q3 2012 and the Manpower Employment Outlook, notes RBC Capital Markets. This measures the difference between the percentage of firms planning to add headcount versus the percentage of firms planning to reduce headcount, fell to 5% in Q4, down from 13% in Q3 and the lowest level since Q1 2009. 

"We look for further stimulus in the next 1-3 months: a 25bps cut to the one year lending rate and at least 50bps in cuts to the RRR", says RBC Capital Markets.