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China's factory activity grows marginally in September

October 01, 2022 00:00:00

BEIJING, Sept 30 (AFP): China's factory activity edged back into growth in September after two months of contraction, official data showed Friday, but the country's strict Covid curbs continued to weigh heavily on demand.

The Purchasing Managers' Index (PMI) -- a key gauge of manufacturing in the world's second-biggest economy -- came in at 50.1, up from August's 49.4 and just exceeding the 50-point mark separating growth from contraction, according to data from the National Bureau of Statistics (NBS).

Snap lockdowns in a number of Chinese cities have dulled consumer enthusiasm and business confidence, though some relief has come with the end of a scorching summer heat wave that prompted some areas to ration power to factories.

"With a basket of policies to stabilise the economy continuing to take effect and the receding impact of high temperatures, the manufacturing sector has somewhat rebounded, pushing the PMI back into expansionary territory," NBS senior statistician Zhao Qinghe said in a statement.

But official data showed the non-manufacturing PMI posted markedly slower growth, falling to 50.6 in September from 52.6 the previous month.

Zhao said virus curbs had forced "quite sharp contractions" in sectors including retail, aviation, accommodation and catering.

The independent Caixin survey -- which tends to capture more small and export-driven firms -- showed factory activity contracted more sharply in September, coming in at 48.1 compared with August's 49.5.

China's manufacturing sector has struggled to sustain growth this year as sweeping Covid restrictions have paralysed major industrial cities like Shanghai, Shenzhen and Chengdu.

But authorities have shown little appetite for easing the curbs and recently urged people not to travel widely during the National Day holiday, which begins on Saturday and typically heralds a spike in consumer activity.

Chinese leaders originally targeted annual GDP growth of about 5.5 percent, but a dismal 0.4 percent expansion in the second quarter has left many analysts to believe it is unlikely to hit that goal.

"The surveys suggest that China's economy continued to lose momentum in September, with the global downturn weighing on exports and virus disruptions dealing a fresh blow to services activity," said Zichun Huang, an economist at Capital Economics.

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