Industrial activity in China experienced significant growth in September 2023. According to conducted surveys, the PMI manufacturing index from RatingDog has risen to 52.1, showing a remarkable increase from 51.5 in August. This index, which is above the forecast of 51.7, has remained above the 50 mark for the tenth consecutive month.
Growth in Services and Manufacturing Sectors
The PMI services index also increased from 51.4 to 51.6, surpassing forecasts of 51.3. On the other hand, the official purchasing managers' index in China's manufacturing sector reached 50.1 in September, improving from 49.8 in August and marking the end of two consecutive months of decline.
According to ING analysts, production appears to have acted as a relative strength this year, although it is primarily influenced by external demand, while domestic consumption and investment continue to retreat.
Challenges Facing China's Economy
Meanwhile, the improvement in factory activity has occurred against a backdrop of weak domestic demand, a prolonged downturn in the housing market, and cautious consumer spending. Analysts believe that the measures announced by China's State Council could help improve the situation in the short term. The council, in a meeting chaired by Li Qiang, the Premier of China, promised a package of measures aimed at stabilizing the housing market and supporting employment and income growth.
Analysts state that PMI data indicates there may be a slight increase in activity data in September. This increase, along with more favorable base effects, could help improve GDP in the third quarter from the 4.3% recorded in the second quarter.
The gap between official and private surveys reflects differences in the coverage of these surveys, with the official survey including more large and state-owned companies, while RatingDog surveys cover more small and private companies.
