The official and private sector Caixin PMI reports indicated that both manufacturing and services sectors were in expansion in Sep. Although the official PMIs picked up and were above expectation, private sector Caixin PMIs unexpectedly softened. 

The employment index barely improved in Sep, underlining the weaknesses in the economy. Meanwhile, further improvements in output/selling prices likely indicated higher cost passthrough and should ease concerns over deflation risks. 

Overall, we still think the economy will be able to achieve the official growth target of 5.0% in 2023. Further monetary policy easing is also likely in 4Q23 to boost domestic demand.