China's Factory Recovery Continues as Service Sector Hits Seven-Year High
By Jonathan Cheng
A gauge of China's factory activity remained in expansionary
territory for an eighth consecutive month while activity in the
services-and-construction sector hit a seven-year high, pointing to
continued recovery across the world's second-largest economy as it
rebounds from the pandemic.
China's official manufacturing purchasing managers index, a key
gauge of factory activity, slipped slightly to 51.4 in October from
51.5 in the previous month, according to data released Saturday in
China by the National Bureau of Statistics. That was largely in
line with economists' expectations for a reading of 51.3.
Despite the deceleration, the official manufacturing PMI stood
above the 50 mark that separates activity expansion from
contraction for an unbroken run stretching back to March, signaling
the robustness of an industrial sector that has been buoyed by
strong export demand and stimulus-driven infrastructure
The manufacturing data also showed strength beneath the headline
numbers. While the subindex measuring production slipped to 53.9
from 54.0 in September, total new orders remained unchanged at a
relatively strong 52.8. The subindex for new export orders rose to
51.0 in October, up from 50.8, topping the 50 mark for a second
Even more robust was China's nonmanufacturing PMI, also released
Saturday in China, which includes services-and-construction
activity. That gauge rose to 56.2 in October from 55.9 in September
and reaching the highest level since October 2013, according to the
The subindex tracing China's service sector, which has lagged
behind the rest of the economy as lingering public-health concerns
kept consumers from going out and spending money, also turned in a
strong performance, rising to 55.5 in October from 55.2 the
Zhao Qinghe, an economist with the statistics bureau, said the
eight-day-long National Day holiday that began Oct. 1 helped
unleash citizens' spending power, as tens of millions of consumers
ventured out to travel and shop, lifting the transportation,
hospitality and entertainment sectors.
Even so, China's official data earlier showed that domestic
consumption during the holiday bounced back to only about 70% of
spending levels during last year's holiday, which was one day
shorter, suggesting that the domestic consumer rebound hasn't
reclaimed pre-pandemic levels.
Chinese authorities reported a 4.9% expansion of gross domestic
product in the third quarter compared with the same period a year
earlier, lower than market expectations but still enough to lift
the world's second-largest economy into positive territory for the
first nine months of the year, offsetting the sharp contraction of
6.8% that China suffered in the first quarter.
Saturday's manufacturing and service data comes just after
senior Chinese leaders wrapped up a four-day meeting on Thursday
where they pledged to shift the economy toward promoting domestic
consumption as a main growth driver over the next five years. They
also vowed to build up the country's technological self-reliance as
Beijing's ties with the West rapidly deteriorate.
In a separate 15-year economic blueprint, also outlined for the
first time on Thursday, Chinese leaders pledged to pull the
country's per capita GDP levels up to that of "moderately developed
countries" by 2035, which some economists said would require the
country to double the overall size of the economy over that span.
China's former paramount leader Deng Xiaoping had earlier
articulated a similar goal, though he had set the target date as
--Grace Zhu and Bingyan Wang contributed to this article.
(END) Dow Jones Newswires
October 30, 2020 21:58 ET (01:58 GMT)
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