Business activity in China’s manufacturing sector rose in September — CNBC

In China, business activity in the manufacturing sector returned to growth in September for the first time in three months. The official manufacturing purchasing managers’ index rose to 50.1 points from 49.8 points in August, CNBC reports, citing data from China’s National Bureau of Statistics.

The figure matched the forecast of analysts polled by Reuters, who also expected a reading of 50.1 points. The recovery in activity came amid a worsening economic situation, prompting Chinese authorities to strengthen measures supporting growth.

Demand and export problems

Chinese manufacturers benefited from the boom in artificial intelligence equipment. At the same time, weak domestic consumer demand remains one of the main challenges for businesses. Companies’ margins are also under pressure from higher energy costs linked to the war in the Middle East.

Exports have been one of the few drivers of China’s economy this year, but this area is also showing signs of strain. China’s trading partners are increasingly voicing concerns over the country’s excess manufacturing capacity and its significant dependence on external demand, while domestic consumption lags behind.

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Economic support measures

On Tuesday, China’s leading economic and financial officials presented targeted fiscal and monetary measures. They provide for lower financing costs and increased lending through the central bank. Beijing called for stronger countercyclical support to keep the economy moving toward achieving its annual growth target.

Nomura economists believe that the new package of measures is insufficient to boost growth because its scale is too small to remove key barriers. Goldman Sachs analysts said the steps are more important as an economic policy signal than as direct stimulus. In their view, targeted credit easing mainly supports supply, while its impact on investment and broader economic growth will depend on policy implementation.

Goldman Sachs also drew attention to the announced mortgage subsidy, which is intended to provide more direct support for housing demand and could increase sales in the short term. The program will last one year and, according to analysts’ estimates, could bring forward some first-home purchases.