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PMI keeps rising in sign economy in full recovery

Zheng Yiran
Updated: Oct 01,2020 07:21 AM    China Daily

China's purchasing managers index figures continued to rise in September, showing that the country's economy is in full recovery, experts said on Sept 30.

"The upcoming National Day holiday may bring certain seasonal factors. However, the recovery trend of the economy is real, and the unbalanced situation of the economy has improved," said Guo Yongbin, an analyst with Everbright Securities.

The country's PMI for the manufacturing sector rose to 51.5 in September from 51 in August, according to the National Bureau of Statistics.

The reading remained well above the 50 mark that separates expansion from contraction, indicating a steady recovery for the sector.

For the first time this year, the subgauges for new export and import orders for the manufacturing sector rose above 50, standing at 50.8 and 50.4, respectively, the NBS said.

The corresponding figures were 1.7 percentage points and 1.4 percentage points higher than in the previous month, thanks to the country's policies stabilizing foreign investment and the partial recovery of demand in the international market.

"With the current overall planning of epidemic prevention and control and continuing advancement in economic and social development, the country's economy remained in a steady recovery trend, and there have been increasing positive signals," said Zhao Qinghe, a senior statistician with the NBS.

The subindex for production grew to 54 from 53.5 in August, while that of new market orders rose for the fifth consecutive month to 52.8, up from 52 a month earlier.

With the continuous recovery of supply and demand and the advent of the traditional peak production season, companies have increased their willingness to purchase and market activity has increased, Zhao said.

The recovery trend in supply and demand has cemented analysts' confidence in China's economic recovery during the rest of the year, given that it has helped address concerns that an economic rebound mainly driven by government-led production resumption would be unsustainable.

Zhou Maohua, a macroeconomic analyst in the financial marketing department of China Everbright Bank, said: "In September, the PMI for both the manufacturing sector and service sector rose, demonstrating that the vitality of domestic economic activities increased month by month, and the recovery of domestic demand accelerated. The pace of economic expansion in the third quarter was significantly faster than that of the second quarter.

"With the recovery of domestic demand, which leads to improvement in the terminal demand for industrial products, plus the revival of overseas demand and the government's support for enterprises, firms' confidence will be further strengthened and they will increase stocks correspondingly. The domestic supply and demand will gradually form a virtuous circle."

Wu Chaoming, deputy head of the Chasing International Economic Institute, said that the recovery of demand from both home and abroad is having an increasingly positive influence on production, and the supply-demand gap has continued to narrow. The country's economy has moved closer to normal.

"Domestic policies have gradually taken effect. In addition, domestic policies are leaning toward the demand side. It is expected that in the fourth quarter, driven by the recovery of infrastructure and consumption, the PMI will be in an upward cycle as a whole, fluctuating around 51. However, it may experience some fluctuation in the short term, considering the fact that the pace of overseas economic recovery has slowed down," he said.

Still, experts said that policies related to stimulating investment and expanding consumption should be further implemented, as the NBS reported that 46.8 percent of surveyed enterprises said that lack of demand remained their biggest challenge.

"The relatively slow pace of demand recovery is still a prominent obstacle that restricts the acceleration of the domestic economy's development. Related policies should be enhanced to strengthen weak links, stimulate domestic demand and keep the domestic economy running smoothly," Zhang Liqun, an analyst at the China Federation of Logistics & Purchasing, said in an interview with China Securities Journal.

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