China Factory Gauge Signals Economic Stabilization Intact

China’s official factory gauge steadied for a second month, suggesting that the economy’s stabilization continued last month and reducing prospects for additional policy easing.

The manufacturing purchasing managers index remained at 50.4 in September, the National Bureau of Statistics said Saturday, compared with a median estimate of 50.5 predicted by economists and 50.4 the prior month. The non-manufacturing PMI rose to 53.7 from 53.5 in August. Numbers higher than 50 indicate improving conditions.

The data add to evidence of improvement as government fiscal support and a soaring property market help underpin growth. Fresh signs of stability may lead policy makers to remain on hold after keeping the benchmark interest rate at a record low for almost a year.

“There’s been some progress made” toward stabilization as larger companies underpinned growth, said Raymond Yeung, chief greater China economist at Australia & New Zealand Banking Group Ltd. in Hong Kong. “The employment reading is not so encouraging. The government needs to find some way to address the unemployment stress.”

Manufacturing employment continued to edge up but still indicated deterioration, rising to 48.6 from 48.4, according to the surveys of purchasing executives of 3,000 companies. The NBS said large enterprises rose to 52.6 while the reading for small companies retreated to 46.1. New export orders rose to 50.1, signaling the first expansion since April.

The foundation of manufacturing growth is still weak as companies face difficulties with operations and capacity cuts, the NBS said in a statement released with the data.

The world’s second-largest economy expanded 6.6 percent in the third quarter, according to economists surveyed before a report due on Oct. 19, from a second-straight 6.7 percent expansion in the second quarter. The Bloomberg Intelligence China gross domestic product tracker rose to 7.16 percent in August.

— With assistance by Lingjiao Mo, and Miao Han