In this photo taken on September 29, 2023, people visit the Confucius Temple Scenic Area in Nanjing, in China痴 eastern Jiangsu province, on the first day of a week-long holiday marking the Mid-Autumn festival and China痴 National Day. (Photo by AFP) / China OUT
BEIJING: China’s factory activity expanded for the first time in six months in September, an official survey shows, adding to a run of indicators suggesting the world’s second-largest economy has begun to bottom out.
The purchasing managers’ index (PMI), based on a survey of major manufacturers, rose to 50.2 in September from 49.7, according to the National Bureau of Statistics, edging above the 50-point level demarcating contraction in activity from expansion. The reading beat a forecast of 50.
The PMI, the first official statistics for September, adds to signs of stabilisation in the economy, which had sagged after an initial burst of momentum early in the year when China’s ultra-restrictive Covid-19 policies were lifted.
Preliminary signs of improvement had emerged in August, with factory output and retail sales growth accelerating while declines of exports and imports narrowed and deflationary pressures eased. P
rofits at industrial firms posted a surprise 17.2% jump in August, reversing July’s 6.7% decline.
“The manufacturing PMI, plus the good industrial profit figures, suggest that the economy is gradually bottoming out,” said Zhou Hao, chief economist at Guotai Junan International.
China’s non-manufacturing PMI, which incorporates sub-indexes for service sector activity and construction, also rose, coming in at 51.7 versus August’s 51.
The composite PMI, including manufacturing and non-manufacturing activity, climbed to 52 in September from 51.3.
Near-term data on the radar of economists include consumer spending for the longest public holiday this year. “Golden Week” kicked off last Friday with the Mid-Autumn Festival, which will be followed by the National Day break through Oct 6.
Passenger travel by rail last Friday reached 20 million trips, a single-day record, state media reported last Saturday, in a bullish start to what authorities had forecast to be “the most popular Golden Week in history”.
More stable economic indicators will be welcomed by policymakers as they continue to grapple with a property sector debt crisis that has rattled global markets.
The authorities have announced a series of measures to shore up the property market, including cutting mortgage rates, although the sector is far from being out of the woods.
New home prices fell the fastest in 10 months in August and property investment declined for an 18th straight month.
China Evergrande Group, the world’s most indebted property developer with more than US$300bil in liabilities, said last Thursday its founder was being investigated over suspected “illegal crimes”.
The Asian Development Bank last week trimmed its 2023 economic growth forecast for China to 4.9% from a July forecast of 5% due to the weakness in the property sector.
Analysts say more policy support will be needed to ensure China’s economy can hit the government’s growth target of about 5% this year.
“China’s economy stabilised partly driven by the loosening of property sector policies,” said Zhiwei Zhang, chief economist of Pinpoint Asset Management.
“The key issue going forward is whether fiscal policy will become more supportive. I think it will, but timing-wise the change of fiscal policy stance may happen next year instead of this year.” — Reuters
