(Yicai Global) Sept. 30 -- A widely watched private survey shows that China’s manufacturing activity in September gained slightly to hit 50, the halfway mark between expansion and contraction and the second lowest reading since April 2020, as the economy recovers from widespread flooding and other negative factors.

The Caixin purchasing managers’ index for manufacturing rose 0.8 percentage point to 50 this month from August, according to data released today by financial media group Caixin.

This is not in line with the figures released by the National Bureau of Statistics, which logged a drop of 0.5 percentage point to negative territory at 49.6. Caixin PMI data tends to focus on small and medium sized firms and has a sample size of 430, while the national survey canvasses 2,000 big enterprises and is a better reflection of the overall economic situation.

The Caixin PMI for manufacturing fell right on the benchmark separating expansion and contraction, showing relatively high downward pressure on the economy, said Wang Zhe, a senior economist at Caixin’s think tank. On the one hand, the Covid-19 pandemic continues to have an impact on demand, supply and circulation. On the other hand, soaring raw material prices and production restriction measures put constraints on manufacturing, which in turn squeezes employment and ultimately weakens demand.

The rebound in September was partly due to the increase in overall sales, Caixin said. The new order sub-index was in positive territory for the first time in three months while the purchasing price sub-index logged its highest value since May. The ex-factory price sub-index was also the highest it has been in three months, showing that cost-side pressure has been partially transmitted to downstream clients due to strong demand.

The survey also showed that manufacturers remain optimistic about the year ahead, with the expectation sub-index rising to a three-month high.

The policy in the coming months should be to focus on improving epidemic prevention measures, easing the pressure on the supply side, promoting employment, maintaining stable raw material prices, ensuring stable and orderly supply and controlling energy consumption, Wang said.

Editor: Kim Taylor