By Joe Cash
BEIJING (Reuters) – China’s manufacturing activity likely expanded for a second straight month in October, a Reuters poll showed on Monday, suggesting recent support measures are helping boost sentiment as the economy stabilises.
The official purchasing managers’ index (PMI) is expected to have held at 50.2 in October, in line with last month’s reading, according to the median forecast of 32 economists in a Reuters poll.
The highest projection was a reading of 50.5 by Capital Economics and the lowest 49.9 by Standard Chartered. An index reading above 50 indicates expansion in activity on a monthly basis while below that signals contraction.
Policymakers since June have rolled out a slew of support measures including modest interest rate cuts, increased cash injections, and more recently, stronger fiscal stimulus. But analysts say this may not be enough for the government to hit its annual growth target of around 5%.
The world’s second-largest economy grew faster than expected in the third quarter, while consumption and industrial activity in September also surprised on the upside.
Nomura, JPMorgan and Moody’s Analytics all upgraded their 2023 growth outlook, following the third quarter data to 5.1%, 5.2% and 5%, respectively.
Despite indicators suggesting the economy is stabilising, the government continues to wrestle with a domestic property crisis, high youth unemployment, depressed private sector confidence and a slowdown in global growth.
China’s top parliamentary body last week approved a 1 trillion yuan ($137 billion) sovereign bond issue in the fourth quarter, and passed a bill allowing local governments to front load part of their 2024 bond quotas to support investment and economic growth.
Earlier this month, the central bank injected into the economy the biggest cash support since late 2020 via short-term policy loans to allow banks to extend credit and keep interests low.
The PMI, which largely focuses on big and state-owned firms, will be released on Tuesday.
(Reporting by Joe Cash; Polling by Devayani Sathyan and Susobhan Sarkar in Bengaluru and Jing Wang in Shanghai; Editing by Sam Holmes)
