A gauge of China’s manufacturing sector jumped unexpectedly last month, signaling a recovery in activity amid government support and a stabilizing global economy.
The official manufacturing purchasing managers’ index rose to 50.2, Chinese National Bureau of Statistics data released yesterday showed.
That was the first reading above 50 since April, indicating an expansion in output. The non-manufacturing gauge was 54.4, the highest since March.
The surprise improvement offered a glimmer of hope that China’s economy might be able to hold in check its slide toward growth of less than 6 percent.
Still, the industrial sector faces a host of headwinds including deflationary risks and rising borrowing costs, with household consumption also being squeezed by increasing food prices.
“Whether a single-month data can signal stabilization is questionable and economic indicators are contradictory,” said Nie Wen (聶文), an economist at Huabao Trust Co (華寶信託) in Shanghai. “It may foreshadow an improving trend, but it’ll be moderate and any solid improvement would have to wait till at least the first quarter of 2020.”
While China and the US are still thrashing out details of an interim trade deal, Beijing faces the possibility that US President Donald Trump will impose tariffs on more Chinese imports on Dec. 15.
A subindex of new export orders climbed to a seven-month high of 48.8 on easing trade tension, but was still in contraction, the data showed.
Businesses showed across-the-board improvement regardless of size, although small and medium-sized enterprises are still shrinking, while employment at factories remained unchanged at 47.3, the data showed.
While more policy easing measures would be necessary to maintain stable growth next year, Chinese authorities might want to adjust the pace until the outlook becomes clearer.
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