China’s manufacturing activity unexpectedly picked up last month despite a week-long holiday, according to a private survey, a further sign of stabilization after Beijing unleashed a stimulus package to shore up the economy.
The Caixin manufacturing purchasing managers index rose to 50.3 last month from 49.3 in September, according to a statement released by Caixin and S&P Global Friday. This compares with a median forecast of 49.7 by economists in a Bloomberg poll. The 50-mark divides expansion and contraction.
The reading followed official surveys released Thursday showing factory activity ended five months of contraction last month, adding to evidence that a stimulus package unveiled in late September has lifted sentiment. The pace of growth exceeded expectations by all 12 analysts surveyed by Bloomberg.
In another sign of improved confidence, China’s residential property sales rose in October, the first year-on-year increase of 2024.
In late September, China made forceful cuts to interest rates and unveiled measures to bolster the housing market. That’s led some economists to raise China’s growth outlook for the year. Economists now project that China can achieve its official growth target of around 5% for this year. Based on the latest Bloomberg survey, they estimate the economy will expand at 4.8%.
The Caixin results continued to be stronger than those from an official poll since last year as exports stayed brisk. The two surveys cover different sample sizes, locations and business types with the private poll focusing on small and export-oriented firms. The Caixin reading trailed the official figure only once in the last 12 months.
Despite the green shoots in manufacturing, Chinese factories are facing rising new business uncertainty ahead as regions like the EU move forward with tariffs on electric vehicles from China and an upcoming US presidential vote could reelect Donald Trump, who has threatened to impose 60% tariffs on Chinese products.
The Chinese economy expanded at the slowest pace in six quarters in the three months ended in September. A prolonged housing slump and downbeat labor market has weighed on consumption and the economy faces long-term challenges including rising trade tensions, entrenched deflationary pressure and a shrinking population.
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