September manufacturing PMI rises; market demand seen to be recovering

China's official manufacturing purchasing managers' index for September stood at 49.8, up from 49.4 in August and marking the second consecutive monthly increase, according to data released on Tuesday by the National Bureau of Statistics.

Based on changes in sub-indices and sector-specific indicators, analysts suggest market demand is stabilizing and recovering, with accelerated production expansion and sustained rapid growth in new growth drivers.

Wen Tao, an analyst at the China Logistics Information Center, said market demand has recently shown signs of vitality, with economic growth momentum continuing to solidify.

In September, as the impact of extreme weather conditions — including high temperatures and heavy rainfall — largely subsided, coupled with the continued implementation of policies to expand domestic demand and stimulate growth, manufacturing market demand stabilized and recovered. The new orders index reached 49.7, up from 49.5 in August.

Meanwhile, the decline in export demand has narrowed, driven by factors such as the sustained strengthening of China's "new trio "of exports — electric passenger vehicles, lithium batteries and solar cells, the stable performance of the equipment industry, and the continued advancement of export market diversification strategies. The new export orders index reached 47.8, up from 47.2 in the previous month.

New growth drivers continued to expand at a relatively rapid pace. In September, the PMI for equipment manufacturing stood at 51.9, up from 50.5 in August. High-tech manufacturing also maintained steady expansion, with its PMI at 51.6. Both the production and new orders indices of the sector have been in the expansion zone for eight consecutive months, indicating that high-tech manufacturing is on a sustained upward trajectory.

Driven by the push to achieve economic targets in the final year of the 14th Five-Year Plan (2021-25) period, macro policies are expected to be further intensified and implemented in the fourth quarter, injecting new momentum and confidence into the market. Additionally, factors such as holidays and promotional seasons will boost consumer demand, while infrastructure development and key projects will drive demand for basic raw materials and equipment, said Wen.

Analysts at Golden Credit Rating International wrote in a report that the manufacturing PMI index rebounded at a relatively fast pace in September. This recovery was driven by several factors: the full dissipation of the impact of hot and rainy weather, the effectiveness of consumption-boosting policies, sustained growth in exports, and the outcome of trade talks between the Chinese and US delegations in Madrid, Spain.

Overall, macroeconomic conditions showed a slight improvement. However, the property market continued its adjustment that month, and consumer spending remained weak, the analysts said in the report.

The main highlight of the September manufacturing PMI was that apart from the high-tech manufacturing PMI — a gauge of new quality productive forces — which stood at 51.6, down slightly from the previous month but still in a relatively strong expansion range, the equipment manufacturing PMI jumped significantly to 51.9, according to the report.

The analysts said they believe that the impact of high US tariffs on global trade and Chinese exports may become more pronounced in the fourth quarter, while the effects of adjustments in the domestic real estate market also warrant continued attention.

However, they pointed out that marked by the accelerated deployment of a 500-billion-yuan ($70 billion) new policy-based financial instrument, a new round of growth-stabilizing policies is expected to be rolled out successively. These measures will focus on bolstering fiscal support, easing monetary policy, and intensifying efforts to stabilize the real estate market. Such actions will provide crucial support for stabilizing macroeconomic operations in the fourth quarter.

Li Chao, a spokeswoman for the National Development and Reform Commission, said on Monday that China will introduce a new policy-based financial instrument worth 500 billion yuan. The NDRC is working with relevant parties to swiftly channel the funds to specific projects, and it will urge local governments to accelerate project construction.

Since September, policies have continued to be introduced in a moderate and steady manner.

Government bond issuance has accelerated, the central bank has injected liquidity through various policy instruments, multiple first-tier cities have eased property market policies, the new policy-based financial instrument has been rolled out more quickly, and measures to support service consumption have been strengthened — all of which have jointly contributed to a marginal improvement in the economy, particularly in manufacturing, said Wen Bin, chief economist at China Minsheng Bank, and Wang Jingwen, director of the Macro Research Center affiliated to the China Minsheng Bank Research Institute, in a research note.

They said that current macro policies are in a phase of "continued effort with timely strengthening", characterized mainly by a gradual and stabilizing approach. Since the pressure to achieve the full-year economic and social development targets is relatively manageable, policies are focused on the dual objectives of stabilizing short-term growth and advancing long-term structural adjustments.

Zhou Lanxu and Ouyang Shijia contributed to this story.

jiangxueqing@chinadaily.com.cn