Beijing, China (BBN)-Factory activity in China picked up in September, beating expectations, according to the government’s official manufacturing survey.
The manufacturing purchasing managers’ index (PMI) was up to 49.8 from 49.7 in August, but the sector did shrink for the second consecutive month, reports BBC.
A number below 50 indicates factory activity contracted, while one above shows expansion in the sector.
China’s vast manufacturing sector has been struggling to regain momentum.
Economists were expecting the official PMI to come in at 49.6, which would have been the weakest level since August 2012.
‘Policy support measures’
Julian Evans-Pritchard, economist at research firm Capital Economics said the better-than-expected data shows that policy easing by the government is helping to boost economic activity.
“Looking ahead, we expect sentiment to begin to improve gradually over the coming months as the stock market stabilises and recent policy support measures continue to feed through into stronger economic activity,” he said in a note on Thursday.
Even though this month’s reading was slightly better than forecast, it still shows that conditions in the country known as the “workshop of the world” are not as rosy as they were.
The world’s second largest economy is on track to grow at its slowest pace in a quarter of a century.
The government expects China to grow 7 per cent this year, but a spate of weak economic data has raised questions about whether the Asian giant will miss that target.
Official vs private
The official data looks at activity amid larger manufacturers, while a private survey from Caixin and Markit focuses on smaller to mid-size businesses in the sector.
The final Caixin/Markit manufacturing PMI for September declined to a six-and-a-half year low of 47.2, but it was better than a preliminary reading of 47 released last week.
Asian markets reacted positively to the closely watched Chinese data, with Japan and Australia gaining 1 per cent in morning trade.
Chinese markets are closed until 7 October for public holidays.