Chinese factory output continues to shrink

<p>China’s factory sector output is still contracting, according to fresh PMI data.</p>

China's once-thriving manufacturing sector has experienced its second month of contraction, fuelling fears the world's number-two economy has not yet escaped its slowdown.

The China Federation of Logistics and Purchasing and the National Bureau of Statistics' purchasing managers' index (PMI) reading for September was 49.8, which is a slight improvement on August's 49.2.

However, because PMI data higher than 50 indicates growth while figures less than this mean contraction, the sector is still shrinking – albeit more slowly than before.

The Chinese manufacturing industry has been suffering as a result of sluggish demand from key trading partners the US and eurozone, which are grappling with debt and growth problems of their own.

China's gross domestic product figures for the third quarter are due midway through October, which will identify if growth is still slowing.

The Shanghai SSE Composite index and Hong Kong Hang Seng closed higher on the last day of trading in September, rising 1.4 per cent to 2086.1 and 0.3 per cent to 20840.3 points respectively.

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