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A private gauge of China’s factory activity showed an expansion for the second straight month in September, thanks to higher production and new orders from home, contrasting with official data indicating a contraction for the fifth consecutive month.
The Caixin China manufacturing purchasing managers index rose to 51.4 in September from 50.4 in August, Caixin Media Co. and research firm Markit said Monday. The reading stayed above the 50 mark that separates expansion in activity from contraction.
While total new orders grew at a faster rate in September, new export orders reported a further reduction as the protracted China-U.S. trade dispute continued to damp foreign sales, Caixin said.
“The recovery in China’s manufacturing industry in September benefited mainly from the potential growth of domestic demand,” Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group said.
Faster construction of infrastructure projects, better implementation of upgrading the industrial sector, and tax and fee cuts are likely to offset the effects of subdued overseas demand and soften the downward pressure on China’s economic growth, said Mr. Zhong.
He also said trade conflicts have a marked impact on China’s exports, production costs and business confidence.
China’s official manufacturing PMI, a competing gauge, released earlier Monday, edged up to 49.8 in September from 49.5 in August, thanks to recoveries in production and total new orders.
The Caixin PMI more closely tracks small, private manufacturers, while the official index focuses more on large, state-owned firms. The official PMI has a larger sample base, surveying 3,000 manufacturers nationwide, while Caixin polls 500 companies.