China Factory Activity Strengthens in September, Official PMI Slows Contraction

BEIJING — China's factory activity continued to improve in September, as the official Purchasing Managers' Index (PMI) saw its best reading in six months, although the sector was still in contraction.

Figures from the National Bureau of Statistics published on Monday revealed that the official manufacturing PMI climbed to 49.8, beating Reuters' estimate of 49.6 and a post-March high. Although still a level below the 50-point mark that divides expansion from contraction, the figure hinted at the possibility that some of the headwinds for the world's second-largest economy could be being cushioned by recent policy support.

Beijing has intensified the fight against industrial overcapacity and stabilize production as domestic demand is weak and global trade pressure persist, including more U.S. tariffs that have weighed on Chinese exports.

Conversely, private research firm RatingDog conducted a different survey and presented a different picture. Its PMI for manufacturing rose to 51.2 in September, topping economists' forecasts of 50.2 and the highest since May. Private surveys, particularly those that focus on export-led manufacturers, frequently depict better momentum compared to official statistics.

The official non-manufacturing PMI, gauging services and construction, fell marginally to 52.9 from 53 last month, while RatingDog's services PMI fell to 50 from 50.3, indicating a slight deceleration in the overall economy.

Economists closely monitor China's October Politburo meeting, where policymakers will likely offer greater guidance on economic policy after a softer third-quarter performance.

"Given that the first-half GDP growth was over 5%, the government can afford to let H2 slow down as long as it does not threaten the annual 5% growth target," Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, said.

The reading highlights Beijing's balancing act of maintaining growth while coping with structural problems in a fast-changing competitive world.