Update | China's factories pick up pace but credit costs hold back recovery
While manufacturing on the mainland picks up pace, two surveys find, rising loan costs are holding back a recovery in overall economic growth
Mainland manufacturing activity picked up speed this month, but rising borrowing costs have prevented a recovery in overall economic growth that has been hit hard by cooling property demand, two private surveys showed yesterday.
Finance Minister Lou Jiwei said at the weekend the central government would not make major policy adjustments on the basis of changes in any single economic indicator, with policy to remain focused on keeping employment and inflation stable. His remarks, made at a Group of 20 meeting in Australia, strengthened market speculation that Beijing might tolerate slower economic growth.
The HSBC flash purchasing managers' index (PMI) on manufacturing released yesterday rose to a two-month high of 50.5 this month from a final reading in August of 50.2, with new domestic and export orders climbing at a faster rate, despite weakening signs in the job market.
Economists in a Reuters poll had predicted the PMI would stall at 50, the threshold separating expansion and contraction.
The China Beige Book survey released by CBB International yesterday also showed manufacturing doing better in the third quarter of this year than in the same period last year. The labour market remained resilient, but retail and real estate were struggling, the New York-based data analytics firm said.
CBB International said: "The economy remained in low gear in [the third quarter], performing unevenly, with rebounds in some sectors offset by mostly negative trends elsewhere."
Despite signs of stabilisation in manufacturing, HSBC chief China economist Qu Hongbin said: "Overall, the data still points to modest expansion. The property downturn remains the biggest downside risk to growth.