China’s Manufacturing Activity and the Week-Long Holidays

The coronavirus pandemic had a tremendous impact on people around the globe. Moreover, even the largest economies in the world suffered losses due to the pandemic. For example, the world’s second-largest economy is recovering as China has the potential to get its economy back on track.

Based on the information provided by the country’s National Bureau of Statistics, the official manufacturing Purchasing Manager’s Index (PMI) for September came in at 51.5. As a result, compared to August, the result increased from 51.0 to 51.5.

As stated above manufacturing activity expanded in the month of September. This fact once more underlines the strength of the local economy. Importantly, the result surpassed expectations, as analysts expected the official manufacturing PMI to come in at 51.2 in September.

It is worth noting that, PMI readings above 50 indicate expansion, while the result below that signal contraction. Notably, PMI readings are sequential and indicate on-month expansion or contraction.

Interestingly, official services PMI came in at 55.9 for the month of September compared to 55.2 in August.

Unfortunately, China’s manufacturing sector suffered losses earlier this year due to large scale-shutdowns. The government wanted to contain the spread of the virus. The country’s government successfully contained the coronavirus.

However, economic data point to resilient exports as well as stimulus-led infrastructure expansion.

Notably, the strong September data was due to the simultaneous recovery of both supply and demand.

China and Golden Week holidays

The week-long Golden Week holidays start on Thursday. This factor could have helped to boost the economy, as factories quickened production before the break. Moreover, the long holiday also spurred consumer demand.

It is worth noting that, the production and new orders for food, alcohol, beverage as well as tea expanded at a faster clip in September compared to August.

This is not the end of the story, as a private manufacturing survey also showed manufacturing activity expanding in September. Interestingly, the Caixin/Markit PMI came in at 53.0.

However, analysts expected the Caixin/Markit PMI for September to come in at 53.1, the same level as in August. People should take into consideration that, the private survey features a bigger mix of small and medium-sized firms. Interestingly, the official PMI survey typically polls a large proportion of big businesses and state-owned companies.

Notably, the Caixin/IHS subindex for total new orders rose to its highest level since January 2011. Moreover, the gauge for new export orders reached the highest level in three years.

The strong demand helped to boost the production and with the output, the subindex remains high. According to the enterprises that took part in the survey, the fallout from the pandemic was gradually decreasing. Moreover, orders were rapidly increasing. China has the potential to solve all issues caused by the coronavirus pandemic. Moreover, the world’s second-largest economy is recovering but it will take time to return to the pre-coronavirus period.

Companies as well as people are struggling to deal with the economic impact of the coronavirus pandemic. Many people lost their jobs around the world. Governments should work with companies to save as many jobs as possible.