BEIJING (AFP) – China’s manufacturing sector saw a surprise pick-up in September, a closely watched survey showed Tuesday, but economists warned a slowdown in the key property sector was an ongoing risk to growth.
HSBC’s preliminary purchasing managers index (PMI) hit a two-month high of 50.5, better than a final reading of 50.2 in August and providing some respite as indicators point to a slowdown in world’s second-largest economy.
A reading above 50 indicates expansion.
Concerns over China’s economy – a key driver of global growth – have intensified following a string of lacklustre recent data, with economists calling for authorities to take further action to kickstart growth.
Qu Hongbin, HSBC’s chief economist for China, said that while the result indicated manufacturing sector activity was stabilising this month, expansion was still modest.
“The property downturn remains the biggest downside risk to growth,” he said in the statement.
“We continue to expect more monetary easing from the PBoC (People’s Bank of China) in order to steady the recovery,” he added.
Since April, Chinese authorities have introduced various stimulus measures, including small business tax breaks, targeted infrastructure spending and incentives to spur lending in rural areas and to small companies.
And last week reports said the PBoC would pump $81 billion into the country’s top five banks to spur lending.
Economists, however, have warned that the effect of stimulus measures introduced since April is waning and worry that a slowdown in the crucial property sector, where new home prices have fallen for
four straight months, could derail any rebound.