(Bloomberg) — China’s factory activity unexpectedly expanded after five months of contraction, suggesting recent stimulus efforts may have begun to boost growth momentum.
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The official manufacturing purchasing managers’ index rose to 50.1 in October from 49.8 last month, the National Bureau of Statistics said Thursday. That’s above the 50 mark separating expansion and contraction from the previous month, and compares with a median forecast of 49.9 by economists surveyed by Bloomberg News.
The non-manufacturing measure of activity in construction and services climbed to 50.2 from 50 last month, the statistics office said. That compares with a forecast of 50.3.
The PMI survey provided the first official economic indicator for the month after China introduced its boldest stimulus package since the pandemic.
“China’s economic activity continued to rebound and improve in October, as a package of new policy measures were rolled out and existing policies began to make an impact gradually,” said Zhao Qinghe, senior statistician at the NBS, in a statement.
The offshore yuan held a slight loss of 0.1% in morning trading. China’s 10-year government bond yields stayed steady at 2.16%.
A measure of production activity under the manufacturing PMI rose to 52, the highest in six months, while overall new orders stabilized. But new export orders remained weak and continued to contract, falling slightly to 47.3.
“Moving forward we’ll need to see if the stimulus rollout can lead to a recovery of domestic demand to offset what looks to be a still weakening external demand picture,” said Lynn Song, chief Greater China economist at ING Bank.
The Chinese central bank unleashed forceful cuts to interest rates and measures to bolster the housing market in late September. The government is expected to announce more details of its fiscal policy support next week at a much anticipated meeting of the country’s top lawmakers.
The stimulus push may help the world’s second-largest economy reach its official expansion target of around 5% for this year. The economy expanded at the slowest pace in six quarters in the three months ended in September, despite early signs of improved consumption during the final weeks of the period.
