China Official PMI Edges Up to 51.1 In September; Misses Expectations

Activity in the Chinese manufacturing sector edged up to 51.1 in September from a reading of 51 registered in August, data released Tuesday by the National Bureau of Statistics of China showed, indicating that economic recovery in the world’s second-largest economy is moving toward stabilization, but at a slower rate than expected.

The government’s official purchasing managers’ index, or PMI, rose by 0.1 percentage points in September after analysts had forecast a reading of 51.5, up 0.5 percentage points above the August reading. A reading above 50 indicates expansion, while a reading of below 50 denotes contraction.

The official PMI has been in expansion territory since July, indicating that growth in large-scale industries – the survey is weighted towards large industries -- is picking up.

According to the data, domestic demand and exports have rebounded significantly in the past three months, and the new orders index in September rose for the third consecutive month to reach 52.8 – its highest since May.

The uptick in the domestic demand reflects the Chinese government’s policy changes this year to steer the economy towards a domestic consumption model from investment and export-focused growth.

Meanwhile, a private survey by HSBC-Markit released on Monday showed that China’s manufacturing sector expanded to 50.2, compared to last week’s preliminary reading of 51.2, as domestic demand was weaker than preliminary estimates suggested. The headline figure was recorded at 50.1 in August.

The HSBC-Markit survey is weighted toward small- and mid-sized companies, and is based on a survey of more than 420 purchasing managers, while the NBS report is based on a survey of about 800 purchasing managers.