China’s manufacturing sector expanded to a six-month high in September, reinforcing signs of a pick-up in economic growth in the world’s second-largest economy, a survey published Monday by HSBC showed.
The preliminary reading of the HSBC Manufacturing Purchasing Managers' Index, or PMI, for September stood at 51.2 -- helped by a rise in new orders -- compared to the 50.9 figure expected by analysts. The headline figure was recorded at 50.1 in August. A reading above 50 indicates expansion while a reading below 50 shows contraction. Meanwhile flash China manufacturing output index came in at 51.1 as against a reading of 50.9 in August.
“The HSBC Flash China Manufacturing PMI rose to a six-month high in September, adding further evidence to China’s ongoing growth rebound. The firmer footing was supported by simultaneous improvements of external and domestic demand conditions,” Hongbin Qu, chief economist for China at HSBC, said in a statement.
New orders jumped to a 10-month high of 50.8 and output increased at a faster rate in September, showing a return of momentum in both domestic and foreign demand, while all sub-indexes -- except that of employment -- surveyed by HSBC, demonstrated resilient growth in the month.
The uptick in the survey, which is weighted toward small- and mid-sized companies and provides an early look at the health of China’s manufacturing sector, indicates that the recent reform measures announced by the Chinese government to prop up the slowing economy have begun to yield results.
"We expect a more sustained recovery as the further filtering-through of fine-tuning measures should lift domestic demand. This will create more favorable conditions to push forward reforms, which should in turn boost mid- and long-term growth outlooks,” Qu said.
Asian markets responded positively to the encouraging data with MSCI's broadest index of Asia-Pacific shares outside Japan trading up 0.28 percent, while the Shanghai Composite Index rose 0.55 percent. Australia’s S&P/ASX 200, which was down 0.8 percent in early trade recovered to 0.42 percent following the data release.