The economy is booming after a slowdown in China's manufacturing sector and a surge in travel during the annual holiday.
China's official manufacturing purchasing managers' index rose to 50.2 from 49.7 in August, the first time it has indicated expansion since March. A PMI reading above 50 indicates growth or expansion, while a reading below 50 indicates contraction.
The sector activity in services and construction also slowed last month, according to a separate index that hit 51.7, its best level in three months.
A separate measure of activity released Sunday also showed that the world's second biggest economy continues to grow, though at a slower rate than the previous month. Caixin Media and S&P Global released PMI data that showed both manufacturing and services losing some momentum.
Economists believe the PMI survey covers mostly larger, state-owned enterprises, while the Caixin reading focusses on smaller, private firms.
The PMI readings have pointed to signs that the Chinese economy may be returning to its peak after GDP growth slowed to just 0.8% for the July quarter compared to the previous three months, as a post-pandemic boom faded, consumers lost confidence and a deep property slump continued to weigh heavily on activity.
In addition, Bumper travel figures have given analysts reason for cautious optimism.
China marked the longest stretch of public holidays this year, spanning eight days to Oct.6. The celebration combines the Mid-Autumn Festival and the annual National Day holiday at the start of October.
According to data released by China State Railway Group, the nation's national railway handle 20.1 million passengers on the first day of the holiday, setting a new record. The Ministry of Transport predicts that highway traffic will hit a record, with an estimated 66 million vehicles on the roads.
At the same time, 896 million domestic trips were predicted to be made by rail, air, roads and waterways, up 15% from 2019, when the National Day holiday was seven days long.
The ministry predicted that total domestic tourist spending would reach 782.5 billion yuan over the period, up 20 percent from 2019 before pandemic lockdowns prevented most people traveling.
China's officials hope that record domestic road and rail travel could boost an economy that has been grappling with tepid domestic demand since the end of zero-Covid restrictions in December.
The government's efforts to boost consumer spending and speed up infrastructure projects have proven evidence of stabilization in recent data. In August, profits at industrial firms grew 17.2 percent, compared to a decline of 6.7% in July, according to data released by the NBS last week.
In August, industrial production increased from a year earlier, accelerating from the 3.7% growth registered in July. In August, retail sales hit a record-breaking 4.6% in August, the fastest growth since May.
Nomura analysts added, thanks partly to the raft of policy measures unveiled since late July.
While Beijing has taken steps to revive the economy, it has resisted from any big stimulus due to concerns about soaring debt levels.
The measures taken in the past few months include lowering interest rates, abolishing restrictions on home purchases and car buying, and allowing local governments to accelerate borrowing for infrastructure investment.
Citi analysts said in a research report on Monday that the stock market was trading in a positive direction.
On Thursday, the International Monetary Fund said that China could still achieve around 5% growth this year, exceeding its government's growth target. In recent data, Julie Kozack said the fund had seen signs of stabilization in China's economy.
However, the World Bank is not certain. On Sunday, the government cut its forecast for China's GDP growth to 4.4% from 4.8% last year, pointing to persistent difficulties such as elevated debt, the property market crisis, and an aging population.
While domestic travel for the Golden Week holiday appears to be robust, Chinese consumers are leaving the mainland in fewer numbers.
Preliminary statistics from ForwardKeys, a global travel data provider, have revealed that Chinese travel in Asia was down 33% on pre-pandemic levels. On the first day of the Golden Week holiday, the number of mainland Chinese tourists entering Hong Kong was still less than half of 2018's level, the government said.
The property sector hasn't been out of the woods yet, he said.
The problems with Evergrande Group have mounted, with its chairman, Xu Jiayin, being detained by the World's most indebted developer.
The company said Xu has been subject to'mandatory measures' on suspicion of crime, which casts serious uncertainty on the future of the embattled property giant.
Nomura analysts said the company did not have any analysts to speak with.