China’s manufacturing sector unexpectedly picked up some momentum in September even as factory employment slumped to a 5-1/2-year low, a potential source of worry for Communist leaders who prize social stability above all else. Signs of a weakening labor market reinforced expectations that China would further relax financing conditions in coming weeks, but stop short of cutting interest rates or loosening the reserve requirement for all banks to support the economy. The HSBC/Markit Flash China Purchasing Managers’ Index (PMI) rose to 50.5 in September from Augusts’ final reading of 50.2, slightly above the 50 mark separating expansion from contraction which had been expected by economists in a Reuters poll. “We believe liquidity conditions will be easy,” said Ting Lu, an economist at Bank of America-Merrill Lynch. “But we don’t expect a universal cut in interest rates or the reserve requirement ratio.” Instead, policymakers are likely to […]