China’s factory activity contracts again, prompting calls for policy support

China’s official gauge of manufacturing activity has stayed in contraction for a sixth consecutive month in September, providing more fuel for calls to step up government support amid persistent external headwinds and weak domestic demand.

The manufacturing purchasing managers’ index (PMI) stood at 49.8 in September according to a Tuesday release from the National Bureau of Statistics, higher than August’s reading of 49.4 but falling short of a 50.1 projection from a survey of economists by financial data provider Wind.

The monthly index compiles survey data given by supply chain managers from a variety of sectors. A reading above 50 suggests economic expansion, while one below 50 indicates contraction.

The new orders sub-index – a measure of manufacturing demand – came in at 49.7 in September, compared to 49.5 a month earlier.

China’s non-manufacturing PMI, which measures activity in the construction and services sectors, dropped to 50 from 50.3 last month, the bureau’s data showed.

Industrial profits, meanwhile, surged 20.4 per cent year-on-year in August, the bureau said in a separate data release on Saturday, the first increase for the figure in months.