China fac­tory ac­tiv­ity edges up in Septem­ber

The Korea Times - - WORLD BUSINESS -

BEI­JING (Reuters) — Fac­tory ac­tiv­ity sur­veys in China pointed to slight im­prove­ment in Septem­ber as do­mes­tic de­mand picked up, but an­a­lysts be­lieve the gains will be short-lived as the prop­erty mar­ket cools and Sino-U.S. trade ten­sions re­main el­e­vated.

Per­sis­tent weak­ness in China’s vast man­u­fac­tur­ing sec­tor has re­in­forced mar­ket ex­pec­ta­tions that Bei­jing needs to roll out more sup­port mea­sures to cush­ion the coun­try’s worst eco­nomic slow­down in decades, even if that risks racking up more debt.

The of­fi­cial Pur­chas­ing Man­agers’ In­dex (PMI) rose to 49.8 in Septem­ber, slightly bet­ter than ex­pected and ad­vanc­ing from 49.5 in Au­gust. But it re­mained be­low the 50-point mark that sep­a­rates ex­pan­sion from con­trac­tion on a monthly ba­sis, data from the Na­tional Bureau of Statis­tics (NBS) showed.

An­a­lysts polled by Reuters had ex­pected the head­line read­ing would be un­changed.

A pri­vate busi­ness sur­vey also re­leased on Mon­day showed growth in fac­tory ac­tiv­ity un­ex­pect­edly quick­ened to a 19-month high of 51.4 in Septem­ber, largely due to a rise in do­mes­tic or­ders as gov­ern­ment sup­port mea­sures kicked in.

But econ­o­mists cau­tioned the re­bound is likely be un­sus­tain­able, and fore­cast fur­ther eco­nomic weak­ness ahead.

“We be­lieve the of­fi­cial man­u­fac­tur­ing PMI may de­cline again, the growth slow­down could gather pace and (fi­nan­cial)mar­kets could be­come more volatile in com­ing months,” econ­o­mists at No­mura said in a note.

No­mura re­cently low­ered its third-quar­ter growth fore­cast for China to 5.9 per­cent and its fourth-quar­ter view to 5.8 per­cent, slow­ing from the 6.2 per­cent re­ported in the sec­ond quar­ter. It cited con­tin­ued U.S. tar­iff pres­sure, slow­ing in­dus­trial pro­duc­tion and signs that prop­erty in­vest­ment and con­struc­tion may be start­ing to cool.

To­tal new or­ders, in­clud­ing those from home and abroad, did swing back to growth in Septem­ber for the first time in five months, the of­fi­cial PMI showed, but the ex­pan­sion was mar­ginal.

More­over, ex­port de­mand re­mained weak, with or­ders fall­ing for the 16th straight month, al­beit at a milder pace.

Pro­duc­tion rose at a quicker pace in Septem­ber, buoyed by the growth in new or­ders. In par­tic­u­lar, out­put in the food pro­cess­ing, tex­tile, spe­cial equip­ment and elec­tri­cal ma­chin­ery sec­tors stood at high lev­els, Zhao Qinghe, an of­fi­cial with the statis­tics bureau said in a state­ment ac­com­pa­ny­ing the data.

“With a slew of growth-boost­ing pol­icy mea­sures kick­ing in, op­ti­mism among man­u­fac­tur­ing firms … reached 54.4, the high­est in the third quar­ter,” said Zhao.

The ac­tiv­ity sur­veys fol­lowed un­ex­pect­edly weak Au­gust data which showed growth in in­dus­trial pro­duc­tion tum­bled to its weak­est level in 17-1/2 years, while fac­tory de­fla­tion deep­ened.

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