A worker wearing a face mask works on a production line manufacturing steel bicycle rims at a factory hit by the coronavirus pandemic in Hangzhou, Zhejiang Province, China, March 2, 2020.via China Daily, Reuters/File Photo Obtaining license rights
BEIJING, Oct 31 (Reuters) – China’s manufacturing activity unexpectedly contracted in October, an official factory survey showed on Tuesday, raising challenges for policymakers trying to engineer a sustained economic recovery. highlighted.
Recent indicators show that the world’s second-largest economy is showing increasing signs of stabilization, supported by a flurry of policy support, although the persistent real estate crisis and weak global demand remain major headwinds. It shows.
Data from the Office for National Statistics showed the official Purchasing Managers’ Index (PMI) fell to 49.5 from 50.2 in October, below the 50-point mark that separates economic expansion from contraction, and below expectations of 50.2.
The non-manufacturing PMI also fell from 51.7 in September to 50.6, indicating a slowdown in activity in the broader services sector and construction.
“The weak PMI data may partly reflect weak demand related to the housing recession and slowing infrastructure spending,” said Xu Tiancheng, senior economist at the Economist Intelligence Unit. .
“Although there are signs that exports are bottoming out, a strong recovery in external demand will likely be difficult,” he added.
New import and export orders have both declined for eight straight months, with fewer orders being placed for parts used in finished products for re-export as manufacturers struggle to find buyers overseas. It suggests that.
“Given that the PMI is a month-on-month indicator, the decline in October does not reflect much of a change in demand, but rather an adjustment in supply,” said Dan Wang, chief economist at Hang Seng Bank China. “There is,” he said.
“September production improved visibly from the previous month due to improved domestic demand, pushing down industrial prices. I could see the efforts being made.”
Policymakers have announced a number of measures to boost growth since June, including modest interest rate cuts, increased cash injections and more aggressive fiscal stimulus.
But analysts say more policy support may be needed to ensure China’s economy meets Beijing’s annual growth target of around 5%.
Nomura, JPMorgan and Moody’s Analytics all upgraded their growth forecasts for 2023 after better-than-expected third-quarter data.
China’s top parliament last week approved a 1 trillion yuan ($137 billion) bond issuance in the fourth quarter, bringing forward some of the 2024 bond issuance quota for local governments to support investment and economic growth. A bill was passed allowing it to be done.
And earlier this month, the central bank injected the largest amount of cash support since the end of 2020 through short-term policy loans to enable banks to extend credit and keep interest rates low.
“The additional 1 trillion yuan will help in November and December,” said Xu of the Economist Intelligence Unit.
Report by Joe Cash.Editing: Sam Holmes and Sri Navaratnam
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