The China Academy of Economics announced that Taiwan's manufacturing PMI index continued to rise by 0.9 percentage points to 63.4% in September, setting the fastest expansion rate since August 2021. (File photo)
China's official manufacturing PMI in September was struggling on the edge of the boom-bust line. The latest index returned to 50.1%, while Taiwan performed well. The China Academy of Economics announced on the 1st that the seasonally adjusted manufacturing purchasing managers index (PMI) for September continued to increase by 0.9 percentage points to 63.4%, expanding for 12 consecutive months and setting the fastest expansion rate since August 2021. However, new orders in the electronics industry have cooled down significantly. Coupled with component shortages, extended delivery times and rising raw material prices, the China Economic Academy pointed out that supply bottlenecks and cost pressures continue to affect manufacturing production and inventory allocation.
The Chinese Academy of Economics pointed out that the continued rise in PMI in September was mainly driven by the increase in supplier delivery time and inventory index. However, the expansion rate of leading new orders has slowed down, indicating that although the manufacturing boom is booming, the follow-up demand momentum still needs to be observed. Among them, the electronics and optical industry is still the main support for the manufacturing industry. The PMI in September was 62.6%, expanding for 11 consecutive months; however, the new orders index fell 10.8 percentage points to 56.7%, and the production index also fell 3.7 percentage points to 60%, reflecting that AI demand is still strong, but there are signs of cooling orders.
According to the analysis of the China Economic and Technological Research Institute, major international AI technology manufacturers have been affected by supply constraints and have adjusted product memory configurations. Smartphone brands have also raised the prices of new products. In addition, other consumer electronics and supply chains have continued to increase prices. The misplacement of long and short materials and extended delivery times continue to interfere with production schedules. The electronics and optical industry inventory index rose to 64.8%, and the customer inventory index also turned too high, indicating that the supply chain that had been rapidly pulling goods due to AI demand began to increase inventory pressure; the outlook for the next six months dropped to 62.4%, the lowest since January this year.
On the other hand, the momentum for orders in the raw materials industry has increased, partially offsetting the impact of the cooling of new orders in the electronics industry. New orders in the chemical, biotech and medical industry rose to an expansion rate of about 60%, and new export orders also surged 8.2 percentage points to 59.5%, the fastest since April 2025.
However, conflicts in the Middle East have intensified, energy transportation has been blocked, international crude oil prices have exceeded US$100 per barrel, and the price index for raw materials in the chemical, biotechnology and medical industries has increased significantly by 11.2 percentage points to 77%. Traditional plasticizers are facing rising raw material and transportation costs, but there is limited room for passing on terminal prices.
The basic raw materials industry has heated up significantly. In September, the PMI rose to 56.7%, and new orders and production simultaneously exceeded 60%. Affected by the "production control and inventory reduction" of Chinese steel companies and the rise in domestic and foreign steel and scrap prices, the raw materials price index surged by 21.6 percentage points to 73.8%. In addition, continued investment in semiconductor factory expansion, AI data centers, and power and energy infrastructure also supports demand for steel and high-end metal materials.
In terms of non-manufacturing, the NMI rose by 1.3 percentage points to 56.9% in September, maintaining expansion for 19 consecutive months. The China Economic Academy pointed out that continuous holidays, year-end projects, technology investment and logistics demand have driven the boom in the service industry. However, cost pressure has also increased simultaneously, with the purchase price index rising to 68.1%, which has remained above 60% for nine consecutive months.
The transportation and warehousing industry is also driven by the peak sea and air transportation season in the third quarter and year-end stocking, and demand is heating up. However, the Middle East routes are blocked and the voyage length is lengthened, and transportation costs continue to increase. However, the retail industry is more conservative about the market outlook. Although the NMI maintained expansion in September, the outlook for the next six months fell sharply to 43.5%, becoming the only one among the eight major industries to show contraction. This shows that when the summer vacation season is over and the anniversary celebration has not yet started, the wait-and-see atmosphere in the consumer market is still strong.
