BEIJING: In September China's factory activity was unexpectedly expanded, helped by a series of recent easing measures, but gains were marginal as the economy continued to grapple with strict COVID 19 curbs, a deepening property crisis and softening exports growth.
The economy was struggling to regain traction after narrowly avoiding contraction in the second quarter, despite a slowdown in services sector growth and a downbeat private manufacturing survey.
The official manufacturing purchasing managers' index was 50.1 in September from 49.4 in August, the National Bureau of Statistics NBS said on Friday Sep 30. The gauge beat expectations for 49.6 in a poll of economists and was above the 50-point mark that separates contraction from growth.
The private Caixin survey released on Friday showed that factory activity contracted at a slower pace in September, with indexes for output, new orders and employment declining due to weak demand.
The growth in the services sector slowed sharply, with PMI for the official non-manufacturing sector falling to 50.6 in September from 52.6 in August. The PMI, which includes manufacturing and services, fell to 50.9 from 51.7.
China has rolled out more than 50 policy measures since late May, but the continued COVID 19 lockdowns, a property crisis and a flagging export demand have weighed heavily on business and consumer confidence.
The new export orders index dropped to 47.0 from 48.1 in August, according to the official manufacturing PMI survey. External demand has been hit by rising rates, high inflation and the war in Ukraine.
Stricter coronavirus measures in multiple cities including the tech hub of Shenzhen and the mega city of Chengdu contributed to falls in business confidence in the manufacturing sector.
With few signs that China will ease its zero-COVID policy soon, many analysts think the economy will grow by just 3 per cent this year. That would be the smallest growth since the 2.2 per cent expansion in 2020, at the height of the COVID-19 pandemic, which was the slowest since 1976.
In the third quarter, China's economy generally recovered and stabilized, according to the state media, Premier Li Keqiang said on Wednesday.
The government will push ahead with the implementation of policy support in the fourth quarter.