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 investment.

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 straight month.

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 statistics bureau.

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 previous month.

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 2050.

--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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