(Updates to note picture available)
BEIJING, Sept 30 China's factory activity
expanded in September as domestic and export orders picked up
but the improvement was marginal and manufacturers continued to
shed jobs, a private business survey showed on Friday.
The Caixin/Markit Manufacturing Purchasing Managers' index
(PMI) rose to 50.1, in line with analysts' forecasts and
slightly higher than August's no-change mark of 50.0, which
separates expansion of activity from contraction on a monthly
The reading has bounced around the neutral 50 level for the
best part of five years, pointing to stubbornly sluggish demand.
Output expanded in September, but at the slowest pace in
three months, the survey showed.
Overall new orders also continued to show modest growth,
with new orders edging into expansionary territory after nine
months of contraction.
Despite easing to its slowest for nine months, the rate of
job shedding remained marked overall. Around 8 percent of
companies surveyed reported lower headcounts, with a number of
firms attributing the fall to cost-cutting.
But companies were able to pass along higher input costs and
raise selling prices of their goods by a sharper pace than in
August, suggesting they were regaining pricing power.
"The readings for the manufacturing PMI over the past three
months seem to indicate that the economy has begun to
stabilise," Zhengsheng Zhong, director of macroeconomic analysis
at CEBM Group, said in a note accompanying the PMI report.
A construction boom fueled by government infrastructure
spending and a housing market rally have helped to underpin
growth in the world's second-largest economy in recent months,
though small and mid-sized private firms like those which
dominate the Caixin survey have continued to struggle.
Profits earned by China's industrial firms grew the fastest
in three years in August with rising sales, higher prices and
reduced costs, official data showed on Tuesday.
China's imports also unexpectedly rose in August for the
first time in nearly two years, suggesting domestic demand may
be picking up. Exports fell at a less than expected extent and
showed signs of improvement, with demand from the United States,
Japan and European Union all improving.
But the Commerce Ministry warned on Thursday that downward
pressure on China's trade is growing due to various
destabilising factors, and said weak global demand is
"impossible" to reverse fundamentally this year, though
January-August trade figures showed positive signs.
Zhong also cautioned that an increasingly strained fiscal
budget could pose a risk to sustainable growth.
"Given that the growth rate of fiscal income has slowed
recently while expenditures have swung, there is insufficient
momentum to drive future economic growth, and there is a risk
that industrial output may decline," Zhong said.
China will release its official factory and service sector
activity readings on Oct. 1.
(Reporting by Yawen Chen and Nicholas Heath; Editing by Kim