In September, the National Bureau of Statistics of China revealed that activity for September in the manufacturing sector expanded at the same rate as in August with the official Purchasing Managers’ Index (PMI) reflecting at 50.4 – a reading above 50.0 signals an expansion.
The PMI for large-sized enterprises (mostly state enterprises) was 52.6 and continues to be higher than the negative threshold. For medium-sized enterprises, it was 48.2, a drop from August levels while the PMI for small sized enterprises also fell.
Among the five sub-indices comprising the PMI, the production index and new orders indices were higher than the negative threshold. The employed person index, main raw materials inventory index, and supplier delivery time index were also lower than the threshold.
In fact, the most encouraging news is perhaps that export orders increased in September along with the growth in output. Analysts suggested that the movement of the PMI over the past few months signals stable growth but a growing dependence on government spending.
On the downside, the housing market is overheated and debt levels are rising fast.