The National Bureau of Statistics of China has reported that the Purchasing Managers’ Index (PMI) for China’s manufacturing sector surged to 50.2 in September 2023. This significant increase has propelled the sector back into the expansion zone, marking a notable turnaround from recent months. In the context of the PMI, a reading above 50 indicates expansion, while a reading below 50 reflects contraction.
This noteworthy development marks the first time since April that the PMI for China’s manufacturing sector has crossed the critical threshold of 50. Previously, the sector had exhibited four consecutive months of growth, according to data provided by the NBS.
In addition to the resurgence in the manufacturing sector, the non-manufacturing PMI also displayed positive performance, registering at 51.7 in September. This figure, standing comfortably above the expansion-contraction threshold, has risen by 0.7 percentage points from the previous month.
Commenting on these encouraging trends in the business activities of both manufacturing and non-manufacturing sectors, NBS statistician Zhao Qinghe emphasized the role of favorable policies that have gradually taken effect, contributing to the overall growth of economic prosperity.
China has recently intensified its counter-cyclical adjustment measures to stabilize market expectations. Earlier in the month, the country reduced the financial institution reserve requirement ratio for the second time this year, aimed at bolstering the foundation for economic recovery and maintaining adequate liquidity in the market.
Furthermore, a series of policies targeting key sectors, including real estate, have injected confidence into the market. China has relaxed criteria for identifying first-home buyers, making it possible for more individuals to benefit from preferential policies. Additionally, interest rates on existing first-home mortgages have been lowered, further stimulating the real estate market.
Analyzing the NBS data, it is evident that both manufacturing and non-manufacturing businesses are maintaining a stable outlook. Sub-indexes measuring market expectations indicate a high level of confidence among businesses in the current economic climate.
The data also highlights the positive momentum in market demand within the manufacturing sector. Business activities are expanding at an accelerated pace, with the new order index for the sector increasing by 0.3 percentage points to 50.5 in September, and the production index rising by 0.8 percentage points to 52.7 during the same period, as per NBS data.
However, it’s essential to acknowledge that the manufacturing sector still faces challenges in terms of recovery and development. Factors such as high raw-material costs, financial constraints, and intensifying competition within relevant industries continue to exert pressure.
Looking ahead, China’s focus should be on effectively implementing the policies and measures that have been introduced and further consolidating the sustained recovery of the economy. As the data indicates positive trends, it is imperative to address challenges and maintain momentum for a robust and stable economic outlook.