China’s Factory Output Edges Up Amid Ongoing Contraction for Sixth Month

Activity in China’s manufacturing sector showed signs of recovery for the second consecutive month in September, despite experiencing six months of contraction. This improvement was supported by increased domestic demand.

The manufacturing purchasing managers’ index (PMI) reached 49.8 this month, rising slightly from 49.4 in August, according to recent data released by the National Bureau of Statistics. A reading below 50 indicates a shrinking industry.

The PMI dipped into contraction territory in April amid rising trade tensions between China and the United States. It stood at 49 in April, then moved to 49.5 in May, 49.7 in June, and 49.3 in August.

The production sub-index was in growth mode for the fifth straight month in September, climbing to 51.9 from 50.8 last month, as per official data. The procurement sub-index increased for the second month in a row, going from 50.4 to 51.6.

The new orders sub-index stayed within contraction but showed some improvement, rising from 49.5 to 49.7. Employment continued to contract but at a slower rate, increasing from 47.9 to 48.5.

Analysts suggest that policies aimed at stabilizing economic growth are starting to show results, with some indicators reflecting a recovery in business production and operations. However, pricing and order-related indexes remain weak, with demand still not fully rebounded, highlighting ongoing challenges within the sector, according to industry experts.

Looking into the fourth quarter, expectations are high that economic measures will be further intensified. The upcoming National Day holiday and e-commerce promotional events are expected to boost consumer demand, while faster infrastructure development should increase the demand for raw materials and equipment. These factors are projected to keep manufacturing output steady, said industry analysts.

The non-manufacturing PMI, which covers construction and services, dropped slightly to 50 in September from 50.3 in August, according to official figures.

The services sector PMI fell to 50.1 from 50.5 during the same period, largely due to seasonal declines in consumer services following summer. Nonetheless, with the upcoming National Day holiday in October, a rebound in the services industry is anticipated, said industry experts.

The overall PMI, combining manufacturing and non-manufacturing data, increased for the second month in a row, reaching 50.6 in September from 50.5 in August and 50.2 in July. This suggests an acceleration in both production and business activities, according to official statistics.