China PMI Shows Signs of Recovery: What It Means for the Economy

China’s Manufacturing PMI Indicates Improved Economic Momentum in Q4

Beijing, Oct 31, 2024 – China’s official purchasing managers’ index (PMI) for October came in at 50.1, marking expansionary territory for the first time since April. As reported by the National Bureau of Statistics, this indicates that the economy is experiencing a boost. Experts are hopeful that this trend will continue into the fourth quarter of the year.

For the last time recorded, the PMI surpassed the 50-point line that indicates contracting activity all the way back in April. This October reading outperformed expectations, landing at 50.1 when economists had projected a result of 49.9.

Monetary and Fiscal Policies to Enhance Economic Recovery

Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, stated, "I expect the economic momentum to improve moderately in Q4 as monetary and fiscal policies loosen." This observed recovery parallels China’s plan to unveil fiscal stimulus details following its upcoming parliamentary standing committee meeting scheduled for November 8.

The PMI for non-manufacturing activity inched up to 50.2 in October, up from 50 in September. This growth is partly due to an uptick in the employment portion of the non-manufacturing PMI, which surged by 1.1 percentage points to 45.8.

Robust Exports Boost Manufacturing

A survey conducted by the U.S.-based China Beige Book revealed that manufacturing output and new domestic and export orders have seen improvement compared to last year amid the real estate slump and tepid consumer demand. Additionally, export orders from the U.S. showed less decline in October.

Stock Market Rally: A Result of Recent Stimulus Announcements

Following a series of high-profile stimulus announcements and President Xi Jinping’s meetings focusing on strengthening fiscal and monetary policy support, stocks rallied. These initiatives are proving impactful, further bolstering Beijing’s efforts to revamp the economy.

What’s Next for China’s Economy?

With the PMI suggesting moderate improvement, the focus will shift to the next fiscal stimulus details expected following the parliamentary meeting in November. Investors and economists will await the Caixin China general manufacturing PMI for October, which is due out this Friday, and the Caixin China general services PMI, scheduled for release on November 5.

China’s upcoming steps, coupled with looser monetary and fiscal policies, look promising to sustain the current momentum, providing hope for a more robust economic recovery in 2024.

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