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China factory gauge signals economic stabilisation still intact

Saturday, October 1, 2016 - 10:07

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China's official factory gauge steadied for a second month, suggesting that the economy's stabilisation continued last month and reducing prospects for additional policy easing.

[BEIJING] China's official factory gauge steadied for a second month, suggesting that the economy's stabilisation continued last month and reducing prospects for additional policy easing.

The manufacturing purchasing managers index remained at 50.4 in September, the China Federation of Logistics and Purchasing said Saturday, compared with a median estimate of 50.5 in a Bloomberg economist survey and 50.4 the prior month.

The non-manufacturing PMI rose to 53.7 from 53.5 in August. Numbers higher than 50 indicate improving conditions.

The data add to evidence of improvement as government fiscal support and a soaring property market help underpin growth. Fresh signs of stability may lead policy makers to remain on hold after keeping their benchmark rate at a record low for almost a year.

"Thanks to heavy fiscal stimulus through SOE investments, production related to infrastructure projects and the enlarging current account surplus, GDP growth could edge up to 6.9 per cent in Q3 and Q4, bringing the annual figure to 6.8 per cent," Alicia Garcia Herrero, chief economist of Natixis Asia Limited in Hong Kong wrote in a recent report.

The world's second-largest economy expanded 6.6 per cent in the third quarter, according to economists surveyed before the report due on Oct 19, from a second-straight 6.7 per cent expansion in the second quarter. The Bloomberg Intelligence China gross domestic product tracker rose to 7.16 per cent in August.

BLOOMBERG

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