BEIJING – China’s manufacturing activity shrank for the fifth consecutive month in September, though the Purchasing Managers’ Index rose by 0.3 points to 49.8, according to data released by the National Bureau of Statistics on Monday.
Still, the PMI – which paints a general picture of the Asian giant’s manufacturing output – came in slightly above expectations as foreign sales have continued to be hampered by the ongoing trade war with the United States.
Despite the indicator’s recovery, analysts of research consultancy Capital Economics believe it is “unlikely to mark the start of a turnaround” as there are “signs of a slowdown in construction activity” which they expect to “deepen in the coming months.”
In this index, a figure above 50 indicates expansion, while anything below it reflects contraction.
This year, the PMI has only shown growth in March and April (50.5 and 50.1 points, respectively), while this month’s figure is the third-best showing of 2019 so far.
Small and medium-sized enterprises took the brunt of the contraction despite improving from the previous month, registering 48.6 and 48.8 points, respectively.
Meanwhile, the indicator for large companies rose 0.4 percentage points from August and managed expansion in registering 50.8 points.
Production is what has kept the manufacturing sector from slumping further. The sub-index for production stood at 52.3 points, an increase of 0.4 from the previous month.
In addition, the sub-index for new orders – which includes both domestic and foreign demand – took a leap into the growth zone with an increase of 0.8 percentage points to stand at 50.5.
NBS statistician Zhao Qinghe said that “the overall economy has improved” with respect to last month and pointed to the sub-index for new orders as one of the positives of the last 30 days.
Production in textiles and equipment continues to be positive, according to Zhao, and despite an ongoing contraction, the data for new export orders has improved to 48.2 points, one percentage point more than the previous month.
The expert also welcomed the rise of the PMI and, among the factors that facilitated it, highlighted the effect of fiscal policies implemented in recent months.
Non-manufacturing businesses remained in the expansion zone for another month at 53.7 points, although the figure came in 0.1 points lower than in August.
This decrease is due to the 0.5-point drop in the services sector, which represents more than half of the country’s GDP and stood at 53 points.