According to the National Bureau of Statistics, the official Manufacturing Purchasing Managers’ Index (PMI) came in at 51.5 in August as compared to 51.0 in August.
Analysts provided by Reuters expected the official manufacturing PMI to hit 51.2 in September.
PMI readings above 50 indicate expansion, while those below that signal contraction. PMI readings are sequential and indicate month-long expansion or contraction.
The official services PMI came down to 55.9 in the month of September compared to 55.2 for August.
China’s manufacturing sector was shut down earlier this year due to massive lockouts to prevent the coronovirus epidemic.
But China’s economic data points to a flexible export and expansion of incentive-based infrastructure.
September’s strong data was due to the simultaneous recovery of both supply and demand, Zhao Quenhe, a senior statistician at the National Bureau of Statistics, wrote.
The week-long Golden Week holiday, which begins on Thursday, October 8, could help factories accelerate production before the break, said Nomura chief China economist Ting Lu before the data release.
According to the CNBC translation, the long holiday also affected consumer demand, adding Zhao to the Bureau of Statistics.
Specifically, food, alcohol, beverage and tea production and new orders expanded at a faster clip in September than in August, Zhao said.
Private survey shows expansion in factory activity
Separately, a private manufacturing survey also showed an expansion of manufacturing activity in September with Sixin / Market PMI coming in at 53.0.
Analysts provided by Reuters expect Sixin / Market PMI for September to hit 53.1 – the same level as August.
Private surveys have a large mix of small and medium-sized firms. In comparison, the official PMI survey generally consists of a large proportion of large businesses and state-owned companies.
The Caixin / IHS subindex for total new orders reached its highest level since January 2011 and the gauge for new export orders climbed to the highest level in three years.
“Strong demand facilitated a recovery in production, with output subindex staying high,” Coin Insight Group senior economist Wang Jae wrote. “The surveyed enterprises said the decline from the epidemic was slowly fading, and orders were growing rapidly,” Wang said.
Although the strength of the manufacturing sector will take pressure from policy makers, the job market in China remains “worrying”.
“Employment reform depends on a longer-term economic recovery and a more stable external environment. In the near future, there remain major uncertainties about the foreign epidemic and the US presidential election,” Wang wrote.