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China factory activity returns to expansion in September

China’s factory activity returned to expansion in September for the first time in three months, in a positive sign for the world’s second-largest economy.

The official manufacturing purchasing managers’ index rose to 50.1 from 49.8 in August, according to the National Bureau of Statistics. A reading above 50 indicates expansion. The number was in line with economists’ expectations.

The production subindex climbed to 51.7 from 50.4, while new orders held steady at 50.5. A separate private survey, the RatingDog PMI, also improved to 52.1 from 51.5.

The data came ahead of China’s weeklong October holiday, when consumer spending is closely watched. Beijing recently announced new subsidies on mortgage interest payments to support the economy. Manufacturing has been a relative bright spot this year, driven largely by external demand even as domestic consumption stays weak.

The improvement comes as Beijing rolls out support measures for the property sector and domestic consumption. Analysts caution that one month of expansion does not mean a full recovery. They will watch October data closely to see if the momentum holds through the holiday season.

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