China Sept. Manufacturing Index Rises Less Than Forecast

A Chinese factory gauge rose less than economists forecast in September, signaling limits on the nation’s rebound from a two-quarter economic slowdown.

The Purchasing Managers’ Index was at 51.1, the National Bureau of Statistics and China Federation of Logistics and Purchasing said today in Beijing. That compares with 51 in August and the 51.6 median estimate in a Bloomberg News survey.

Fiscal support measures such as spending on railways, urban infrastructure and shanty-town redevelopments are helping Premier Li Keqiang to protect a goal of a 7.5 percent economic expansion this year. Today’s report came after a manufacturing gauge released yesterday by HSBC Holdings Plc and Markit Economics unexpectedly weakened from a preliminary reading.

“The Chinese government should be able to achieve its 7.5 percent growth target,” said Lu Ting, head of Greater China economics at Bank of America Corp. in Hong Kong. “Premier Li will continue his current pro-growth policies.”

The MSCI Asia Pacific Index rose 0.4 percent as of 12:12 p.m. in Tokyo after a jump in an index of large Japanese manufacturers’ confidence and as investors monitored a potential shutdown of the U.S. government. Chinese markets were closed for a holiday.

“China’s economy is stabilizing in a good trend and the nation has the confidence, conditions and ability to realize its main economic targets this year,” state radio yesterday cited Li as saying.

Analysts’ Forecasts

Today’s manufacturing-index reading was below the estimates of 28 of 30 economists in the Bloomberg News survey. Levels above 50 signal expansion, while those below point to contraction.

The statistics bureau reports third-quarter gross domestic product on Oct. 18. The economy probably grew 7.7 percent from a year earlier, according to a Bloomberg News survey of analysts, up from the second quarter’s 7.5 percent pace.

Communist Party leaders including Li will meet in November to set economic policy in coming years. The premier has signaled that he wants to reduce the state’s hand in the economy and financial system, with the government experimenting with relaxing controls in a free-trade zone in Shanghai.

Lacking Momentum

The manufacturing index showed the economy’s momentum is “not strong,” Zhang Liqun, a researcher with the State Council’s Development Research Centre, said in a statement on a CFLP website.

Zhang Zhiwei, chief China economist at Nomura Holdings Inc. in Hong Kong, said today’s number “reinforces our view that the recovery is not sustainable.”

The Purchasing Managers’ Index released yesterday by HSBC and Markit rose to 50.2 in September from 50.1 in August. The final number was less than a 51.2 preliminary reading and the 51.2 median estimate in a Bloomberg News survey.

The gap between the initial and final readings was the biggest since publication of the preliminary or “flash” data began in 2011. In a phone interview yesterday, Chris Williamson, chief economist at Markit Economics in London, said he couldn’t explain the difference; “it’s just one of those things.”

— With assistance by Xin Zhou

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