An employee works on the production line at the Jingjin filter press factory in Dezhou, Shandong province, China, August 25, 2022. REUTERS/Siyi Liu/File Photo Acquire License Rights
- China manufacturing PMI in September: 50.2 versus 49.7 in August
- China: September non-manufacturing PMI: 51.7 versus 51.0 in August
- China Composite Purchasing Managers’ Index in September: 52.0 versus 51.3 in August
BEIJING, Sept 30 (Reuters) – China’s factory activity increased in September for the first time in six months, an official survey showed on Saturday. This adds to a range of indicators that suggest the world’s second-largest economy has begun to bottom out.
The Purchasing Managers’ Index (PMI), based on a survey of major manufacturers in China, rose from 49.7 to 50.2 in September, just above the 50-point mark that represents a decline, according to the National Bureau of Statistics the activity is differentiated from an expansion. The value exceeded a forecast of 50.0.
The PMI data, the first official statistics released for September, reinforces signs of stabilization in the economy, which had slowed after an initial bounce earlier in the year when China’s highly restrictive COVID-19 policies were lifted.
The first signs of improvement emerged in August, with factory output and retail sales increasing, while declines in exports and imports narrowed and deflationary pressures eased. Industrial company profits posted a surprise 17.2% rise in August, reversing July’s 6.7% decline.
“The manufacturing purchasing managers’ index and strong industrial profit numbers suggest that the economy has gradually bottomed out,” said Zhou Hao, chief economist at Guotai Junan International.
China’s non-manufacturing PMI, which includes sub-indices for service sector activity and construction, also rose to 51.7 from 51.0 in August.
The composite PMI, which includes manufacturing and non-manufacturing activity, rose to 52.0 from 51.3 in September.
More stable economic indicators will be welcomed by policymakers as they continue to grapple with the housing debt crisis that has rocked global markets. Authorities have announced a series of measures to support the property market, including cutting mortgage rates, although the sector is far from out of the woods.
New home prices fell in August at their fastest pace in 10 months and property investment fell for the 18th consecutive month.
China Evergrande Group (3333.HK), the world’s most indebted real estate developer with liabilities of more than $300 billion, said on Thursday that its founder was being investigated for alleged “illegal crimes.”
The Asian Development Bank last week cut its economic growth forecast for China in 2023 to 4.9% from a July forecast of 5.0% due to weakness in the real estate sector.
Analysts say more policy support will be needed to ensure China’s economy can reach the government’s growth target of about 5% this year.
“China’s economy stabilized partly due to the easing of real estate sector policies,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management.
“The key question for the future is whether fiscal policy will be more supportive. I think that will be the case, but in terms of timing, the change in fiscal policy stance could happen next year rather than this year.”
Reporting by Ryan Woo, Tina Qiao and Joe Cash; Edited by Michael Perry and William Mallard
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