China’s factory sector shows signs of steadying

The mainland's vast factory sector showed signs of steadying last month as export orders climbed, a private survey showed yesterday, easing fears of a hard landing but pointing to a still-sluggish economy facing considerable risks.

The final HSBC/Markit manufacturing purchasing managers' index hovered at 50.2, unchanged from the August reading, which was a three-month low, but lower than a preliminary reading of 50.5. The 50 mark separates expansion from contraction in activity on a monthly basis.

More worrisome, the survey showed further weakness in the job market, with the sub-index for manufacturing employment shrinking for the 11th consecutive month, which is bound to worry the mainland's leaders.

Economists believe policymakers will have to roll out more stimulus measures in coming months to meet Beijing's growth target of about 7.5 per cent.

"Overall, the data in September suggests that manufacturing activity continues to expand at a slow pace," said Qu Hongbin, the chief economist for China at HSBC. "We think the risks to growth are still on the downside and warrant more accommodative monetary as well as fiscal policies."

The overall output level fell to its lowest in four months but managed to hold above the 50-point level. Despite a run of weak economic readings, mainland leaders have said repeatedly that no dramatic change in policy is imminent.