Title: China’s Factory Activity Expands, Indicating Signs of Economic Stabilization
In a promising development for the Chinese economy, factory activity in China expanded for the first time in six months in September, according to an official survey. The purchasing managers’ index (PMI) rose to 50.2 in September, surpassing expectations and indicating a notable expansion in activity.
These positive PMI figures add to the signs of stabilization in the economy, which had previously struggled following the lifting of COVID-19 restrictions. In fact, August had already shown preliminary signs of improvement, with both factory output and retail sales growth accelerating.
Notably, the non-manufacturing PMI also rose, reaching 51.7 in September, while the composite PMI, including both manufacturing and non-manufacturing activity, climbed to 52.0. Economists suggest that this data suggests the Chinese economy is gradually bottoming out.
Alongside the improved PMI figures, there have been positive signs for the country’s economic recovery. The “Golden Week” public holiday period kicked off with a record-breaking 20 million rail trips, indicating a bullish start to the vacation period.
These stable economic indicators are particularly welcomed as Chinese authorities continue to navigate a property sector debt crisis. Despite measures taken to support the property market, such as cutting mortgage rates, challenges still remain. Notably, China Evergrande Group, the world’s most indebted property developer, is currently under investigation.
The weakness in the property sector has led the Asian Development Bank to revise down its growth forecast for China. Analysts now believe that more policy support will be needed to reach the government’s growth target of approximately 5% for this year.
Overall, the expansion in factory activity and the positive PMI data provide encouraging signs for China’s economic recovery. As the country continues to navigate challenges in the property sector and work towards achieving its growth targets, these developments are sure to be closely monitored by economists and investors alike.
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