BEIJING – China’s manufacturing activity expanded for the first time in six months and services picked up in October, indicating that Beijing’s boldest stimulus measures since the Covid-19 pandemic are helping the battered economy turn a corner.
The National Bureau of Statistics (NBS) purchasing managers’ index (PMI) on Oct 31 rose to 50.1 from 49.8 in September, just above the 50-mark separating growth from contraction and beating a median forecast of 49.9 in a Reuters poll.
In a further encouraging sign, the non-manufacturing PMI, which includes construction and services, rose to 50.2 this month, after it dropped to 50.0 in September.
Policymakers are banking that a last-ditch stimulus effort announced in late September will pull economic growth back towards this year’s roughly 5 per cent target and kick lending and investment back into gear, as a sharp property market downturn and frail consumer confidence continue to deter investors.
China’s growth is important to Singapore as the country is Singapore’s single biggest export market.
“This is primarily an indication of the early impact of the higher fiscal support, enabled especially by an acceleration in government bond issuance,” said Xu Tianchen, senior economist at the Economist Intelligence Unit.
“There was a record amount of such issuance in August-September, which translated into fiscal spending.”
The mood in the manufacturing sector has been depressed for months by tumbling producer prices and dwindling orders, with industry plagued by the same lack of confidence that has held back investors and domestic consumers.
Signs of recovery
There are early signs, however, that Beijing has switched into a higher stimulus gear to prop up the world’s second-largest economy and that confidence is slowly building.
China is considering approving next week the issuance of over 10 trillion yuan (S$1.86 trillion) in extra debt in the next few years,