China’s manufacturing output expanded this month for the first time since April, official data showed Thursday, rare good news for leaders struggling to boost activity in the world’s second-largest economy.
The country is battling sluggish domestic consumption, a persistent crisis in the property sector and soaring government debt — all of which threaten Beijing’s official growth target for this year.
In October, China’s Purchasing Managers’ Index (PMI) — a key measure of industrial output — was 50.1, the National Bureau of Statistics (NBS) announced, up from 49.8 in September.
A figure above 50 indicates an expansion in manufacturing activity, while a reading below that indicates a contraction.
The key indicator had slid for six months, with the last positive PMI recorded in April, when it stood at 50.4.
The October data also outperformed a forecast of 49.9 by analysts surveyed by Bloomberg.
The NBS said Thursday’s data release showed the “business climate of the manufacturing industry has rebounded”.
“The 50.1 level is the smallest possible expansion for the PMI but nonetheless bucks expectations for continued contraction,” wrote Lynn Song, chief economist for Greater China at ING.
The latest data “is a positive sign that the small bounce back of industrial production that we saw in September could continue,” Song added.
Beijing has in recent weeks unveiled a slew of measures to funnel cash into the economy, including several key rate cuts and looser restrictions on home-buying.
Zhang Zhiwei, president and chief economist of Pinpoint Asset Management, said in a note Thursday that he expected “economic momentum to improve moderately… as monetary and fiscal policies loosened”.
But many investors say they are still waiting to see official confirmation of a major fiscal stimulus plan, expected to come at a meeting of top officials next week.
‘Further improvement’
The standing committee of the National People’s Congress — China’s rubber-stamp parliament — will gather in Beijing from November 4 to 8 for deliberations that state media say will involve economic planning.
“The PMIs have overstated the weakness in China’s economy during the past year,” wrote Julian Evans-Pritchard of Capital Economics in a note.
“Official surveys point to a further improvement in October, with an acceleration in manufacturing and services more than offsetting a further slowdown in construction,” he added.
Beijing is targeting annual growth this year of around five percent — a goal that officials have recently insisted is within reach.
The International Monetary Fund revised its forecast for China’s growth this year down slightly to 4.8 percent in a report published last week.
Zhang, of Pinpoint Asset Management, wrote that he thought Beijing’s growth goal has been “transmitted into actions”, adding that he expects “more hints” on China’s upcoming economic policy after next week’s election in the United States.
