China factory activity grows for first time in six months in September

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China factory activity grows for first time in six months in September

China's factory activity has grown for the first time in six months in September, an official survey showed on Saturday, adding to a run of indicators suggesting the world's second-largest economy has begun to bottom out.

The purchasing managers'index, based on a survey of major manufacturers, increased to 50.2 in September from 49.7, according to the National Bureau of Statistics, edging above the 50-point line demarcating contraction in activity from expansion. The PMI, the first official measure of the year, adds to signs of stabilization in the economy, which had sagged after an initial burst of momentum early in the year when China's extreme-restrictive COVID-19 policies were lifted.

In August, preliminary indications of improvement were emerging, with industrial output and retail sales growth accelerating while declines of exports and imports narrowed and deflationary pressures eased. In August, profits at industrial firms surged 17.2%, reversing July's 67% drop.

China's nonmanufacturing PMI, which incorporates subindexes for service sector activity and construction, rose to 51.7, compared to August's 51.0.

The composite PMI, which includes manufacturing and nonmanufacturing activity, rose to 52.0 from 51.3 in September.

Near-term data on the radar of economists include consumer spending for the longest public holiday this year. The Mid-Autumn Festival will start on Friday, and it will be followed by the National Day break, through Oct. 6.

Policymakers are welcoming more stable economic indicators as they continue to grapple with a property sector debt crisis that has engulfed global markets. The government has outlined measures to shore up the property market, including lowering mortgage rates, although the sector is far from being out of the woods.

In August, new home prices dropped by more than a third in August and property investment fell for an 18th consecutive month.

The Asian Development Bank has trimmed its 2023 economic growth forecast for China to 4.9% from a forecast of 5.0% in July.

Analysts say more policy support will be needed to ensure China's economy can meet the government's growth target of about 5% this year.

's economy stabilized partly driven by the loosening of property sector policies,' said Zhiwei Zhang, chief economist of Pinpoint Asset Management.