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China Official PMI Signals Modest Acceleration In Factory Activity

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Chinese manufacturing activity expanded at a slightly faster rate in September, with business activity across the sector seeing a modest pick up, a survey by the China Federation of Logistics and Purchasing, or CFLP, and the National Bureau of Statistics showed Tuesday.

The headline purchasing managers' index, or PMI, rose to 51.1 in September from 51 in August. Economists had forecast a steeper increase in the index to 51.6. Readings above 50 indicate expansion of the sector.

The outcome is consistent with Monday's final reading based on the manufacturing survey by HSBC and Markit Economics, which also showed a modest improvement in the expansion of manufacturing activity in September. The index was downwardly revised from the preliminary estimate.

The CFLP survey showed that new orders, production and other major sub-indexes continued to maintain their modest growth.

The new orders index rose to 52.8 in September from 52.4 in August. The new export orders index scored 50.7, up from 50.2 in August. The production index advanced to 52.9 from 52.6.

Input price inflation accelerated during the month as indicated by the purchasing price index, which rose to 54.5 from 53.2 in the previous month.

However, employment at manufacturers continued to contract, with the corresponding index falling to 49.1 from 49.3 in August.

The subdued growth in the factory sector highlights the challenges faced by Premier Li Keqiang in his efforts to maintain growth momentum while moving ahead with the planned economic reforms.

Yet most of the indicators released from China this month suggested that the world's second largest economy may have started to recover from the recent slowdown, which was largely the result of an ongoing restructuring.

The country's gross domestic product growth slowed to 7.5 percent year-on-year in the second quarter from 7.7 percent in the first three months of the year, official figures revealed in July.

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