Factory activity in China contracts again in September

Chinese factories were quieter again in September as demand softened at home and abroad.

Several surveys have shown strains on smaller and medium-sized manufacturing and service companies which are the driving force behind China’s economy.

Activity at larger state factories shrank for a second straight month, though at a slower pace than in August.

Smaller manufacturers reported the worst conditions in six and a half years.

The weak readings are fueling fears that the Chinese economy may be cooling more rapidly than previously thought, and that growth may slip below 7 percent in the third quarter.