China's Caixin Manufacturing PMI unexpectedly jumps to 51.4 in September, Aussie hits fresh highs

China's September Caixin manufacturing PMI came in at 51.4 vs. 50.2 expected and 50.4 last, signaling a modest improvement in the operating conditions last month.

Last hour, the purchasing managers' index (PMI) for China's manufacturing sector arrived at 49.8 in September, up from 49.5 in August, the National Bureau of Statistics (NBS) reported.

Summary

“China’s manufacturing sector saw a modest improvement in overall operating conditions during September. Production and total new orders both expanded at quicker rates than in August, despite a further reduction in new export business. Staffing levels were broadly unchanged, however, leading to a stronger increase in backlogs of work.

At the same time, firms expanded their buying activity and inventories, albeit at marginal rates. Currency movements meanwhile contributed to a renewed rise in average input costs, while prices charged were broadly stable after a two-month sequence of discounting. Chinese goods producers continued to express a relatively subdued level of confidence towards future output, as worries persisted over the outcome of the ongoing China-US trade negotiations.

The increase in the headline figure was partly driven by a faster rise in overall new work. The latest upturn in new orders, though modest, was the quickest since March 2018. Underlying data continued to signal that the increase was supported by firmer domestic demand, as new work from abroad continued to decline.

That said, the latest reduction in new export orders was only slight. Companies often commented that the ongoing China-US trade dispute had continued to dampen foreign sales. Higher volumes of total new work led firms to expand production again in September. The rate of growth was the fastest seen since August 2018.”

On the positive surprise, the AUD/USD pair jumped about 10-pips higher to print fresh session tops at 0.6770, but the bulls lacked follow-through amid pre-RBA nervousness.