China’s factory activity expands for first time in 3 months, but ‘should be taken with a grain of salt’

Official manufacturing purchasing managers’ index (PMI) rose to 50.1 in September, while the non-manufacturing gauge fell to 50.6

Caixin/Markit manufacturing PMI fell to 48.1 in September from 49.5 in August, marking the second month of contraction

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Official manufacturing purchasing managers’ index (PMI) rose to 50.1 in September, up from 49.4 in August. Photo: AFP

Published: 9:40am, 30 Sep 2022Updated: 7:08pm, 30 Sep 2022

China’s factory activity beat expectations and expanded for the first time in three months in September, data released on Friday showed, but analysts said the improvement “should be taken with a grain of salt” due to ongoing coronavirus restrictions and an increasingly challenging export environment.

The official manufacturing purchasing managers’ index (PMI) rose to 50.1 this month, up from 49.4 in August, according to the National Bureau of Statistics (NBS). The 50-mark separates growth from contraction on a monthly basis.

The official non-manufacturing PMI, which measures business sentiment in the services and construction sectors, fell to 50.6 in September from 52.6 in August.

“The bottom line is that local stimulus is having some impact, but conditions at home remain challenging, while export conditions will come increasingly under pressure heading into 2023,” said Katrina Ell, senior economist at Moody’s Analytics.

On Wednesday, Premier Li Keqiang said that China’s had economy generally recovered and stabilised in the third quarter, with Beijing set to push ahead with its economic programme in the last three months of the year.

Beijing has been rolling out measures since May, including tax cuts and infrastructure spending, to cushion the blow facing the economy and to boost investor confidence.

The official composite PMI, which includes both manufacturing and services activity, fell to 50.9 in September, down from 51.7 in August.