China official PMI seen steady at 51.2 in September but pressures remain

Growth in China's manufacturing sector probably steadied in September as factory orders held up, a Reuters poll showed, providing some welcome relief for those who worry the Chinese economy is quickly losing steam. "It is good that it is above 50, but it is not that great," Li Haitao, an economist at Guangdong Development Bank, said in reference to the PMI. Expectations that China would reduce the amount of deposits that banks must set aside as reserves, or the reserve requirement ratio (RRR), were bolstered earlier this month when data showed growth in factory output unexpectedly fell to a six-year low in August as the housing slowdown increasingly weighs on other parts of the economy. The official PMI followed a similar preliminary survey by HSBC/Markit released earlier this week that showed the manufacturing sector gaining momentum in September, even though factory employment slumped to a 5-1/2-year low.

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