China's economic recovery powers ahead as PMI continues to expand

China's manufacturing and service sector activities stood above expansion territory for eight straight months as economic recovery continued apace amid the government's pro-growth measures.

The manufacturing purchasing managers' index (PMI) came in at 51.4 in October, slightly down from 51.5 in September but above market expectation of 51.3, according to data released on Oct 31 by the National Bureau of Statistics (NBS).

A reading above 50 indicates expansion, while a reading below reflects contraction.

Commenting on the data, NBS senior statistician Zhao Qinghe said recovery of the country's production and business activities is accelerating.

The sub-index for production stood at 53.9, remaining in expansion territory and down 0.1 points from September, while that for new orders stayed unchanged at 52.8, indicating a continued improvement in demand, Zhao said.

The new export order and import sub-indexes climbed to 51 and 50.8 in October, up 0.2 points and 0.4 points respectively from the previous month.

Citic Securities attributed the 0.1-point pullback in October manufacturing PMI to holiday factors, as factories closed for the National Day and Mid-Autumn Festival break from Oct 1 to 8, which however boosted the service sector.

The PMI for the country's non-manufacturing sector came in at 56.2 in October, up from 55.9 last month.

In October, the service sector accelerated its pace of recovery, with the sub-index for business activities expanding 0.3 points from the previous month to 55.5.

With the eight-day holiday a key driving force, Chinese people are now more willing to go out and spend their money, Zhao said.

A breakdown of the data showed the sub-indexes for the business activities of rail transportation, civil aviation as well as accommodation and catering remained above 59.

The manufacturing and non-manufacturing PMI data bounced back after diving in February amid tight control measures against COVID-19.

As the country brought COVID-19 under control, the government rolled out a series of policies, including higher fiscal spending, tax relief and cuts in banks' reserve requirement rate to cushion the economy from the epidemic blow and support employment.

The country's economy expanded 4.9 percent year-on-year in the third quarter of the year, faster than the 3.2-percent growth seen in the second quarter.

The International Monetary Fund has nearly doubled China's growth forecast to 1.9 percent in 2020, 0.9 percentage points above the IMF's June forecast.