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

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

A worker works on the production line at Jingjin filter press factory in Dezhou, Shandong province, China, on Aug 25, 2022.

China's manufacturing activity has experienced a surge in activity for the first time in six months.

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

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

Preliminary signs of improvement were seen in August, with factory output and retail sales accelerating, with declines of exports and imports narrowed and deflationary pressures eased. In August, profits at industrial firms posted a surprise 17.2 per cent jump, reversing July's 6.7 per cent decline.

The non-manufacturing PMI, which incorporates sub-indices for service sector activity and construction, rose to 51.7, compared to August's 51.0.

The composite PMI, which includes manufacturing and non-manufacturing activities, rose to 52.0 from 51.3 in September.

Policymakers will welcome more stable economic indicators as they grapple with a property sector debt crisis that has shattered global markets. Although the property industry is far from being out of the woods, the authorities have announced a series of measures to shore up the property market, including lowering mortgage rates.

In August, new home prices fell at the fastest rate in 10 months and property investment fell for an 18th consecutive month.

China's Evergrande Group, the world's most indebted property developer with more than $300 billion in debt, said its founder was being investigated over suspected 'illegal crimes'.

The Asian Development Bank last week trimmed its economic growth forecast for China to 4.9 per cent from a July forecast of 5.0 per cent, down from a July forecast of 4.9 per cent.

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

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