China factory activity returns to growth in September on stimulus hopes
China's manufacturing PMI rose to 50.1 in September, ending two months of contraction and matching forecasts. The non-manufacturing PMI beat expectations, while Beijing's stimulus package and central bank measures aim to support the property market and economy.
BEIJING: Factory activity in China returned to growth in September, official data showed on Wednesday (Sep 30), after two months of contraction, providing some relief for policymakers who have rolled out a fresh round of stimulus measures.
The manufacturing purchasing managers' index (PMI), a closely watched gauge of industrial health, came in at 50.1 this month, just above the 50-point mark separating expansion from contraction, according to the National Bureau of Statistics (NBS). The reading was in line with the forecast in a Bloomberg survey of economists and improved from the 49.8 and 49.2 recorded in July and August respectively.
NBS statistician Huo Lihui said in a statement that the data showed "there has been recovery in economic (conditions)". He noted that "three key industries show rapid expansion", including equipment manufacturing, high-tech manufacturing and the consumer goods industries. "Production and operations in the relevant industries remained robust overall," he added.
The non-manufacturing PMI, which measures activity in services and construction, came in at 50.2, outstripping a Bloomberg forecast of 49.2 and up from last month's 49.0. "The construction industry's business activity index rose to its highest level this year," Huo added.
The data came after Beijing on Monday announced "a package of pragmatic and effective incremental policy measures" to support the world's second-largest economy, which faces headwinds including trade frictions with Washington and an entrenched property-sector crisis that has spooked consumers. State news agency Xinhua said the government will introduce measures aimed at stabilising the property market and promoting employment and income growth.
On Tuesday, the People's Bank of China followed suit, announcing measures to reduce credit costs in sectors including infrastructure and technology, and to offer more subsidies to home buyers. The central bank will also broaden loans to support investment in water, power-grid, computing, communications, urban pipeline and logistics networks.
Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, warned that while the stimulus policies are "another step in the right direction", they might not be adequate to stabilise the economy alone. "The fiscal subsidies are confined to apartment transactions less than 1.5 million yuan (US$224,000) in value. Most apartments (in key cities)... don't qualify as they are more expensive," he said. Nevertheless, he added, "policy makers are taking a new approach", and the move marks "one step forward to address the problem properly".
China's economy has been supported by a historic boom in exports that has shown no sign of stopping in recent months, and by the global artificial-intelligence frenzy that has increased demand for its tech products.
