*

China's manufacturing PMI remains below growth threshold

at 49.8

*

Non-manufacturing PMI slows to 50.0 from 50.3 in August

*

Separate private sector factory activity PMI at 51.2 from

50.1

*

Overall economic impulse still points to soft underbelly

*

Markets waiting for clarity on trade deal with U.S.

BEIJING, Sept 30 (Reuters) - China's manufacturing

activity shrank for a sixth month in September, an official

survey showed on Tuesday, suggesting producers are waiting for

further stimulus to boost domestic demand, as well as clarity on

a U.S. trade deal.

The official purchasing managers' index (PMI) rose to 49.8

in September versus 49.4 in August, below the 50-mark separating

growth from contraction, but beating a median forecast of 49.6

in a Reuters poll.

The prolonged slump underlines the twin pressures on China's

economy: domestic demand has failed to mount a durable recovery

in the years since the pandemic while U.S. President Donald

Trump's tariffs have squeezed Chinese factories as well as

overseas firms that buy components.

All the same, a separate private-sector survey of factory

managers showed the fastest expansion since March, buoyed by

rising new orders and accelerated production growth, including

an uptick in new export orders.

The two surveys cover different pools of producers, with the

NBS placing more emphasis on large- and medium-sized firms

focused on domestic sales, while RatingDog General PMI, compiled

by S&P Global, which came in at 51.2, up from 50.5 in August,

includes a larger share of export-orientated private companies.

"The rebound reflects a seasonal uptick as the summer

disruptions are behind us and the government becomes more

supportive," said Xu Tianchen, senior economist at the Economist

Intelligence Unit, referring to the official PMI's headline

figure.

China's economic momentum is marked by swings, he added: a

strong first quarter from early stimulus, a slower midyear,

followed by a fourth quarter rebound as the government ramps up

support measures to meet growth targets.

UNCERTAINTY OVER U.S. TRADE DEAL

Policymakers rolled out a series of consumer loan subsidies

in mid-August, a decision vindicated by separate factory output

and retail sales data for the month, which saw their weakest

growth in 12 months.

Pan Gongsheng, the governor of the People's Bank of China,

said last week a range of monetary policy tools to support the

economy remained available, but refrained from following the

U.S. Federal Reserve with a rate cut, as some economists

speculated the central bank might.

Despite signs the $19 trillion economy is losing momentum,

authorities appear in no hurry to roll out major stimulus

measures, given resilient exports and a stock market rally,

market watchers say.

Adding to signs of a slowdown, the official

non-manufacturing PMI, which includes services and construction,

fell to 50.0 from 50.3 in August, according to the National

Bureau of Statistics (NBS), its worst reading since November.

The NBS composite PMI of manufacturing and non-manufacturing

came in at 50.6 in September, compared with 50.5 in August.

The new export orders sub-index contracted for a ninth

straight month, while input prices shrank again after posting

two months of growth, and employment and factory gate prices

remained firmly in the doldrums.

The data point to producers slashing prices to find buyers

overseas, despite the fact that China's exports to regional

rival India hit an all-time high in August, according to customs

data, and shipments to Africa and Southeast Asia are on track

for annual records.

But no other country comes close to the consumption power of

the U.S., where Chinese producers sell more than $400 billion

worth of goods annually, accounting for around 14% of total

exports.

Chinese leader Xi Jinping phoned Trump on September 19 for

the first time in three months, and while the call appeared to

ease tensions, it remains unclear whether it yielded the

expected agreement on popular short-video app TikTok, which

analysts see as key to a broader trade deal.

Disagreements on technical details appeared to be weighing

on negotiations, as Chinese and U.S. trade officials met again

last Thursday to revisit issues discussed in talks before this

month's Madrid summit, where a framework TikTok deal was

reached.