CHINA’S manufacturing activity grew at the fastest pace in more than two years in October, as the economy continued to stabilize and the supply-side reform achieved results, data showed yesterday.
The official Purchasing Managers’ Index, a comprehensive gauge of operational conditions in largely state-owned manufacturing companies, added 0.8 points from a month earlier to 51.2 last month, according to the National Bureau of Statistics and the China Federation of Logistics and Purchasing.
A reading above 50 means expansion in the manufacturing sector.
The October figure pointed to a third straight month of growth, and was the highest since July 2014.
Meanwhile, the Caixin China General Manufacturing PMI, a counterpart for smaller and private manufacturers, also rose to 51.2 in October, the fastest pace since March of 2011.
“China’s manufacturing PMI surprised the market on the upside,” said Li Wei, an economist at Commonwealth Bank of Australia. “We expect industrial production growth to accelerate to 6.4 percent in October, up from 6.1 percent a month earlier.”
Zhao Qinghe, analyst at the National Bureau of Statistics, said the improvement was due to renewed market demand and the results of supply-side reform, which pushed industrial companies to cut excessive capacity and move to more profitable sectors.
“The pace of capacity reduction in steel and coal industries has quickened in recent months, and it helped create a better industrial structure,” Zhao said.
The components of the official PMI showed that new orders rose to 52.8 in October from 50.9 in September, while production improved to 53.3 from 52.8.
China’s economy grew 6.7 percent from a year earlier in the third quarter, in line with the pace in the first two quarters and well within the government’s target of between 6.5 percent and 7 percent.
The official non-manufacturing Business Activity Index, which measures the services sector, rose 0.3 points from a month earlier to 54 in October, the highest since December, the statistics bureau said.