China gains momentum
The HSBC preliminary purchasing managers' index (PMI) for September hit 51.2, the highest since March when it stood at 51.6, HSBC said in a statement on Monday.
The result was higher than last month's final reading of 50.1, which had improved from an 11-month low of 47.7 in July and ended three months of contraction, according to the bank.
The index tracks manufacturing activity in China's factories and workshops and is a closely watched gauge of the health of the world's second-largest economy. A reading below 50 indicates contraction, while anything above signals expansion.
The first half of this year saw analyst concerns about China's economy mount after an expected rebound from growth of 7.7 per cent last year - the worst performance in 13 years - failed to materialise.
The September figure suggested China's ongoing growth rebound is consolidating on the back of "simultaneous improvements" in overseas and domestic demand, HSBC economist Qu Hongbin said in the release.
"We expect a more sustained recovery as the further filtering-through of fine-tuning measures should lift domestic demand," he said.
Frequently Asked Questions about this Article…
China’s preliminary HSBC manufacturing PMI for September was 51.2, the highest reading since March. A PMI above 50 signals expansion in factory activity, so this print suggests manufacturing is strengthening — a key sign everyday investors watch because China is the world’s second‑largest economy and its demand trends can influence global growth and company earnings.
The PMI tracks manufacturing activity in factories and workshops. Readings above 50 indicate expansion, while readings below 50 signal contraction. Investors use PMI readings as a timely gauge of economic momentum and demand conditions that can affect markets, corporate sales and commodity use.
The September preliminary PMI rose to 51.2 from last month’s final reading of 50.1. That followed an 11‑month low of 47.7 in July. The move indicates a rebound from mid‑year weakness and a return to expansion in manufacturing activity.
HSBC’s release said the September figure suggests the ongoing growth rebound is consolidating thanks to ‘simultaneous improvements’ in overseas and domestic demand. HSBC economist Qu Hongbin also said they expect a more sustained recovery as policy fine‑tuning filters through to lift domestic demand — but investors should watch upcoming data for confirmation.
According to HSBC’s commentary, both overseas and domestic demand have improved and are supporting the rebound in manufacturing. That dual improvement helps make the recovery more robust than if gains were coming from only one source.
Analysts were concerned earlier in the year because an expected rebound failed to materialise after growth slowed — the article notes China grew 7.7% last year, its weakest 13‑year performance — which made the mid‑year PMI slump to 47.7 notable. The September uptick eases some of those concerns.
Investors should monitor subsequent PMI releases, data on domestic demand and exports, and any policy fine‑tuning measures that aim to lift consumption. Consistent readings above 50 and continued signs of improving domestic and overseas demand would support the view of a consolidating rebound.
Because China is the world’s second‑largest economy, a strengthening manufacturing PMI can signal higher demand for commodities and goods, influence global trade flows, and boost confidence in companies exposed to Chinese demand. Everyday investors often use PMI trends as part of assessing economic risk and sector exposure in their portfolios.
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