The Zhitong Finance App learned that Guosheng Securities released a research report saying that the manufacturing PMI returned online in September, and the service and construction PMI both rebounded more than seasonally, indicating that economic momentum had recovered in September, and that a package of policies such as 9.29 interest rate cuts would help stabilize real estate, stable investment, and stable expectations, indicating that a “4.5% guarantee” for the whole year should be achieved. Looking ahead, the short-term focus of the policy is still on implementing and “making good use of” stock policies, including speeding up the pace of debt issuance and fiscal expenditure, and implementing interest rate discount policies as soon as possible. There should also be more incremental policies in the future, keeping an eye on “making good use of local government debt balance limits” (balance limit of about 1.16 trillion dollars as of the end of 2025), as clearly stated by the 9.28 National Standing Committee meeting, and focusing on consumer promotion policies.
Guosheng Securities's main views are as follows:
The manufacturing PMI continued to recover and return to the expansion range in January and September, and the non-manufacturing boom rebounded more than seasonally. The manufacturing PMI in September was 50.1%, up 0.3 percentage points from month to month, slightly weaker than seasonal (median change in manufacturing PMI from month to month in September 2016 to 2025 was 0.5 percentage points), returning to the expansion range. The non-manufacturing PMI in September was 50.2%, up 1.2 percentage points from month to month, which was stronger than seasonal (median change in non-manufacturing PMI in September 2016-2025 was 0.4 percentage points month-on-month), returning to the expansion range. Among them, the service sector PMI rebounded 0.9 percentage points, and the construction PMI rebounded sharply by 3.4 percentage points. The composite PMI output index rebounded 1.2 percentage points month-on-month to 50.7% in September. Some regions increased travel subsidies in September, compounded by the early release of Mid-Autumn Festival National Day holiday delivery and travel demand, driving an ultra-seasonal recovery in the service industry; the impact of extreme weather weakened, the issuance of special bonds accelerated, and policy financial instruments were gradually implemented, driving the construction industry to improve over seasonality.
2. Looking at each item, pay attention to the five major signals on the supply and demand side, trade side, price side, inventory side, and employment side:
1) Supply has improved markedly, demand has declined marginally, and the pattern where supply is stronger than demand continues. On the supply side, the PMI production index for September was 51.7%, up 1.3 percentage points from the previous month, and stronger than seasonal (median change in the manufacturing PMI production index in September 2016-2025 was 0.6 percentage points month-on-month), and continued to expand. Looking at high frequencies, the operating rate of automobile semi-steel tires fell in September and PTA operating rate rebounded sharply; on the demand side, the PMI new orders index fell 0.1 percentage points to 50.5% in September, continuing expansion. Among them, the new export orders index fell 0.1 percentage points, pointing to a marked improvement in supply, a marginal decline in demand, and supply being stronger than the continuation of demand; from an industry perspective, agricultural and sideline food processing, pharmaceuticals and other industries are at a high level of prosperity; the supply and demand side of the chemical raw materials and chemicals, ferrous metal smelting and rolling processing industries is weak. In September, the PMI for high-tech manufacturing, equipment manufacturing, consumer goods, and basic raw materials industries was 52.5%, 51.0%, 50.7%, and 48.0% respectively, with month-on-month changes of -0.4, -0.4, +1.7, and +0.1 percentage points. Among them, the PMI for high-tech manufacturing has been above the boom and bust line for 20 consecutive months, and the consumer goods manufacturing industry has clearly rebounded and returned to the boom range.
2) The index of new export orders declined slightly, but combined with South Korea's exports and domestic port throughput data for the first 20 days of September, it is expected that the export growth rate will continue to be strong in September. On the export side, the new export orders index fell 0.1 percentage points to 50.0% in September, and the performance was weaker than seasonal (the median change in manufacturing PMI new export orders in September 2016-2025 was 0.5 percentage points month-on-month). Overall, export orders fell due to the typhoon in July, recovered slightly in August, and overall external demand remained resilient; at high frequencies, South Korea's exports in the first 20 days of September were 78.3% (previous value 56.0%), and combined with a year-on-year increase in domestic port throughput, it is expected that the export growth rate will continue to be strong in September; on the import side, the import index rebounded 0.6 percentage points to 49.2% in September, and is still in a contraction range.
3) The situation between the US and Iran is repeated, and the price index is clearly rising. PPI is expected to rise again in September, and inventories of finished products will fall. On the price side, the purchase price index for major raw materials rebounded 4.2 percentage points to 60.8% in September, and the ex-factory price index rebounded 3.6 percentage points to 54.0%, and continued to rise sharply. The situation in the US and Iran has repeatedly driven oil prices to rise again. Combined with tight downstream chemical inventories and a marked rise in prices, PPI growth is expected to rise again in September; on the inventory side, PMI raw material inventories rebounded 0.1 percentage points to 48.2% in September, finished product inventories fell 0.8 percentage points to 47.6%, and procurement volume rebounded 0.5 percentage points to 51.0%, indicating that improved demand led to a recovery in production and procurement intentions. Sales of finished products picked up and inventories fell back.
4) The boom in small and medium-sized enterprises has rebounded, and employment in the construction and service industries has improved. In September, the PMI for large, medium and small enterprises changed by 0, 0.3, and 1 percentage point respectively. Large enterprises continued to expand, and the prosperity of small and medium-sized enterprises clearly rebounded. In September, the manufacturing, service, and construction industry employee indices changed by -0.3, 0.4, and 1.3 points, respectively. Employment in the construction and service industries improved, but they were still in a contraction range.
5) The boom in the service and construction industries has rebounded beyond the season. In terms of the service sector, the service sector PMI rebounded 0.9 percentage points to 50.2% in September, which is better than seasonal (median change in service sector PMI in September 2016-2025 was 0.2 points month-on-month). Some regions increased travel subsidies in September, compounded by the Mid-Autumn Festival National Day holiday delivery and early release of travel demand, driving a super-seasonal recovery in the service industry. Looking at the industry, industries such as telecommunications, radio, television and satellite transmission services, monetary and financial services, and insurance are booming; industries such as capital market services and real estate are weak. In the construction sector, the construction industry PMI rebounded 3.4 percentage points to 50.3% in September, which was stronger than seasonal (the median month-on-month change in construction PMI in September 2016 to 2025 was 1.3 points) and returned to the expansion range, mainly due to the weakening impact of extreme weather, accelerated issuance of special bonds and the gradual implementation of policy financial instruments. On September 29, PSL interest rates were lowered by 0.25 percentage points, and the “six networks” construction was included in the scope of support, and the policy was strengthened to stabilize infrastructure. In the short term, we will continue to keep a close eye on the effects of the implementation of the real estate incremental policy, the progress of issuing government bonds, the use of policy financial instruments, and the progress of the “Six Networks” construction.
3. Overall, the manufacturing PMI continued to recover and return to the expansion range in September. The service and construction industries rebounded unseasonally, and economic momentum recovered somewhat. In the manufacturing sector, tight inventories partially constrained downstream chemical production and affected the recovery in manufacturing PMI. On the non-manufacturing side, with the increase in travel subsidies, the acceleration of the issuance of special bonds, and the gradual implementation of policy financial instruments, the prosperity of the service and construction industries has improved over the seasons. Looking at high frequencies, the year-on-year growth rate of real estate sales in September 30 continued to decline. South Korea's exports and China's port throughput growth rate rebounded in the first 20 days. The pattern of “strong external demand and weak domestic demand” continued, and the problem of insufficient domestic demand was still prominent.
4. Looking back, there is little pressure to achieve the annual growth target. The short-term focus of the policy should be to strengthen implementation, “make good use” of stock policies, and “plan in a timely manner” incremental policies. Overall, although the economic downturn accelerated in July-August, considering the restoration of economic momentum in September, adding the 9.29 package policy will help stabilize real estate, stable investment, and stable expectations, indicating that a “4.5% guarantee” for the whole year should be achieved. The short-term focus of the policy is still on implementing and “making good use of” stock policies, including speeding up the pace of debt issuance and fiscal expenditure, and implementing interest rate discount policies as soon as possible. There should also be more incremental policies in the future, keeping an eye on “making good use of local government debt balance limits” (savings limit of about 1.16 trillion dollars by the end of 2025) clearly stated by the 9.28 National Standing Committee, and keeping an eye on possible consumer promotion policies.