The mood continues to brighten in the boardrooms of Chinese companies.
The Purchasing Managers’ Index (PMI) for the manufacturing sector reached 50.2 points in September and just exceeded the important 50 mark, the statistics office announced on Saturday in Beijing. The indicator thus continued the upward trend that began in May and rose by 0.5 points compared to the previous month. Exceeding the 50 point mark signals an increase in industrial activity.
Only the large companies had their assessments above 50 points (51.6), as the statistics showed. Medium and small companies ranked just below. The mood also improved in the service sector and the construction industry; In the statistics, this group had 51.7 points (plus 0.7 points).
The PMI shows how purchasing managers in surveyed companies see the future in their industry. The economic indicator also provides information about the mood in the market. Investors therefore use the index to make investment decisions. Some observers had previously expected the mood in China’s economy to continue to improve.
According to analysts, a relaxed situation has recently had an effect monetary policy positive for the economy. Local governments also borrowed more money to invest in infrastructure. However, the outlook for the rest of the year remains uncertain. China is currently struggling with a severe real estate crisis. Major property developers in the industry, which is a key economic driver in China, are heavily in debt.
ifo boss Clemens Fuest recently referred to the very high investments that China has made in the past in relation to economic output. “Money was wasted on a large scale without there being any lasting benefit,” Fuest said. “This course is not sustainable.” This also led to problems in the Chinese real estate sector.
With the opening of the country ruled by the Communist Party after the corona pandemic, the purchasing managers’ index shot up, according to the statistics office. However, the euphoria soon diminished: since April, the PMI has been below 50 points every month.
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BEIJING (dpa-AFX)