China’s factory activity expands

China’s factory activity expanded at the fastest pace in more than a year in August, with a jump in new orders, official data showed yesterday, raising hopes that a rapid economic slowdown in the world’s second-largest economy may have been arrested.

The purchasing managers’ index (PMI) figure, published by the National Bureau of Statistics, rose to 51.0 in August from 50.3 in July, the highest level since last April and ahead of market expectations of 50.6 in a Reuters poll.

A reading above 50 indicates expanding activity, while a reading below 50 points to a contraction. Beijing has stepped up efforts to prevent a sharp economic slowdown by quickening railway investment and public housing construction and introducing a series of measures to help smaller companies, which could sustain the revival of internal demand in the coming months.

“We are seeing clearer signs of economic conditions improving,” said Haibin Zhu, chief China economist at JP Morgan in Hong Kong.

As one of the first leading indicators gauging economic momentum, the improved reading could bode well for other August data, further confirming a stabilising trend in the economy.

The official survey showed an across-the-board recovery in all sub-indices, ranging from new orders and quantity of purchases to input prices and employment.

A separate PMI survey sponsored by HSBC, which focuses more on small- and medium-sized firms in the private sector, is scheduled to be published today.