China’s factory activity returns to expansion, ‘positive sign’ after stimulus
China’s official manufacturing purchasing managers’ index returned to growth in October, ending five straight months of contraction
Factory activity in China swung back into growth in October on the back of Beijing’s recent policy support, ending five straight months of contraction, signalling that domestic demand may be recovering, analysts said.
“The latest improvement was driven by stronger domestic demand,” said Julian Evans-Pritchard, head of China economics at Capital Economics, with a reading above 50 typically indicating an expansion of economic activity.
But while there are signs that the domestic situation is slowly improving, it is still too early to tell if the policy support is sufficient to help the world’s second-largest economy regain a stable footing, analysts said.
The reading marked just a slight expansion, but it is still “a positive sign that the small bounce back of industrial production that we saw in September could continue,” said Lynn Song, chief economist of Greater China at ING.
“Moving forward we’ll need to see if the stimulus roll-out can lead to a recovery of domestic demand to offset potentially softer external demand picture,” he added.
