China’s manufacturing sector strengthened in September, with both private and official surveys pointing to an improvement in factory activity.
A private-sector survey showed manufacturing expanding at its fastest pace in five months, while official data indicated that both manufacturing and services returned to modest growth.
China Manufacturing PMI Beats Expectations
The RatingDog Manufacturing PMI rose to 52.1 in September, up from 51.5 in August.
The result also came in above market expectations of 51.7.
A reading above 50 signals expansion, while a figure below 50 indicates contraction.
September marked the 10th consecutive month of growth and the strongest reading since April.
Services Activity Also Improves
China’s services sector also strengthened during the month.
The RatingDog services PMI climbed to 51.6 from 51.4, beating forecasts of 51.3.
The improvement suggests that economic momentum extended beyond manufacturing into parts of the services sector.
Official Manufacturing PMI Returns to Expansion
China’s official manufacturing PMI also improved in September.
The index rose to 50.1 from 49.8 in August, matching market expectations.
The reading ended two consecutive months of contraction and signaled a return to modest factory growth.
Analysts at ING noted that manufacturing has remained one of the stronger parts of the Chinese economy this year.
However, they added that much of the growth has been driven by external demand, while domestic consumption and investment remain weaker.
Non-Manufacturing Activity Strengthens
The official non-manufacturing PMI rose to 50.2 in September from 49.0 a month earlier.
That was stronger than expectations of 49.2.
The composite PMI, which combines manufacturing and services activity, increased to 50.7 from 49.5.
Together, the figures point to a broader improvement in Chinese economic activity during September.
Factory Activity Recovers After Weather Disruptions
China’s manufacturing rebound came after heavy rain and typhoons disrupted production in several regions during August.
Advanced manufacturing and exports have remained relatively resilient, helping support factory activity.
However, the broader economy continues to face challenges.
Weak domestic demand, cautious consumer spending and the prolonged property downturn remain major concerns.
China Announces New Economic Support Measures
The Chinese government has also introduced additional measures aimed at supporting growth.
A State Council meeting led by Premier Li Qiang announced policies designed to stabilize the property market, support employment and increase household incomes.
Analysts believe these measures could help reduce some of the gap between stronger manufacturing activity and weaker domestic demand.
China GDP Could Improve in Q3
ING analysts said the latest PMI readings suggest that September economic activity could show a modest improvement.
More favorable year-on-year comparisons could also support third-quarter GDP growth.
The analysts said this may be enough to help growth recover from the 4.3% rate recorded in the second quarter.
Why China’s PMI Surveys Differ
The difference between China’s official PMI and the private RatingDog survey largely reflects the companies included in each index.
The official PMI has greater exposure to large and state-owned companies.
By contrast, the RatingDog survey includes more small and privately owned manufacturers.
Overall, the latest PMI data suggest that China’s factory sector gained momentum in September, although weak domestic demand and the property slowdown continue to weigh on the broader economy.
