(Repeats story from Saturday)
* Input prices sub-index eased to 56.6 in Sept from Aug's
* Official PMI rises to 51.2; HSBC PMI unchanged at 49.9
BEIJING, Oct 1 China's factory activity picked
up in September for a second month in a row and export orders
strengthened, offering some reassurance that the world's
second-largest economy can weather the global economic turmoil.
The official purchasing managers' index showed inflation
pressures eased slightly, but probably not enough for Beijing to
relax in its battle against soaring prices.
China's PMI inched up to 51.2 from August's 50.9, largely in
line with a median forecast of 51.3 in a Reuters poll
The new export orders index rebounded to 50.9 from 48.3 in
August, which was a 28-month low. The 50-point mark is the
dividing line between expansion and contraction.
China is by no means immune to slowdowns in the United
States and Europe, its two biggest export markets. However,
strong domestic demand and solid Asian export growth have
provided some insulation.
Still, investors have grown increasingly concerned that
China's economy may slow more sharply than anticipated. Beijing
has tried to orchestrate a modest cool-down to help curb
inflation, but a deepening debt crisis in Europe threatens to
trigger a recession there, which could trip up global growth.
Saturday's data suggested fears of a more pronounced China
slowdown may be somewhat overblown. September's PMI reading was
the highest since May. The index had steadily declined from
March through July as growth in new orders slowed.
"September's PMI should provide some support to global
investor confidence, if only at the margin," said Alistair
Thornton, an economist at IHS Global Insight in Beijing.
"However, this does little to clarify policy stance, with
authorities still eyeing the situation in Europe and the United
States for their cue to loosen," he added in a note.
The People's Bank of China reaffirmed on Friday that it
would keep monetary conditions tight in its effort to rein in
stubborn inflation, adding that containing domestic price
pressure remains its top priority.
The official PMI pointed to a slight ease in inflationary
pressure, with the input price sub-index edging down to 56.6
last month from August's 57.2.
However, a separate survey by HSBC, released on Friday,
showed the same sub-index climbed to a four-month high of 59.5
in September from 55.9 in August.
The official PMI, compiled by the China Federation of
Logistics and Purchasing on behalf of the National Bureau of
Statistics, provides a snapshot of business conditions in
factories before official monthly output data.
"The small rise in September PMI indicates a rising
likelihood that the downward trend in economic growth is
stabilising," said Zhang Liqun, a researcher with the
Development Research Centre, a think-tank under China's cabinet.
"But considering all factors, there is still high
possibility the economy could continue to slow. Small firms are
facing many difficulties right now," he added in a statement
accompanying the data release.
The HSBC PMI painted a gloomier outlook of Chinese factory
activity. That survey showed manufacturing shrank for a third
successive month in September, with a headline reading of 49.9,
unchanged from August but up from a preliminary reading of 49.4.
HSBC's report captures more small private firms which have
been hit harder by domestic credit curbs and slack global
demand. The official PMI includes more state-owned companies.
"China needs to increase its policy support for the small
and medium-sized enterprises as soon as possible," Zhang said.
The sub-index for overall new orders picked up to 51.3 from
previous month's 51.1, reversing a downward trend since March.
Although the official PMI sub-index for new export orders
improved, it lagged behind the readings for the same month of
the past few years, excluding the ultra-weak readings recorded
in the midst of the global financial crisis.
"That means the year-on-year growth of China's exports will
fall in the next two quarters under the weakening global
demand," said Dong Xian'an, chief economist of Peking First
(Reporting by Langi Chiang; Editing by Emily Kaiser)