China's manufacturing activity index edges up, business sentiment improving

BEIJING - China's manufacturing activity index warmed up in September as a raft of policy measures that increased support for the real economy kicked in, buoying up the business sentiment.

The purchasing managers' index (PMI) for China's manufacturing sector edged up to 49.8 in September from 49.5 in August, the National Bureau of Statistics (NBS) said Monday.

A reading above 50 indicates expansion, while a reading below that reflects contraction.

A breakdown of the data showed manufacturing production and market demand both saw expansion, NBS senior statistician Zhao Qinghe said.

The sub-index for production ticked up to 52.3 in September, while that for new orders climbed to 50.5 from 49.7, signaling faster production activities and increased orders.

The reading also showed industrial upgrading continued apace, with the sub-index for high-tech manufacturing sector staying above 51 for eight consecutive months to stand at 51.3, Zhao said.

In addition, business sentiment in the manufacturing sector has improved as the sub-reading for business expectation rose to 54.4 in September, the highest in the third quarter, he said.

The PMI for the non-manufacturing sector came in at 53.7 in September, down from 53.8 in August but still in the expansion zone.

The service sector activity accelerated slightly, with the sub-index for the sector up to 53 from 52.5 in the previous month. Rapid expansion was seen in industries such as airlines, postal services, telecommunications and software, and monetary and financial services, with their sub-readings staying above 58.

The sub-index for the construction sector fell to 57.6 in September from 61.2 in August but still remained at a relatively high level, according to the NBS.

The reading also showed non-manufacturing enterprises stayed upbeat about future market developments, with the business expectation sub-index standing at 59.7 in September.

China has been strengthening measures since August to channel more funds into the real economy, especially to increase lending to small and private companies.

In the latest move, the People's Bank of China, the country's central bank, has announced to cut the reserve requirement ratio (RRR) for financial institutions by 50 basis points from Sept 16 to support the real economy and reduce the real cost of social financing earlier this month.

About 800 billion yuan was released from the broadly-based RRR cut.

Monday's data also showed China's composite PMI slightly increased from 53 to 53.1, indicating steady business expansion.