The country is battling sluggish domestic consumption, a persistent crisis in the property sector and soaring government debt -- all of which threaten Beijing's official growth target for this year.
In October, China's Purchasing Managers' Index (PMI) -- a key measure of industrial output -- was 50.1, the National Bureau of Statistics (NBS) announced, up from 49.8 in September.
A figure above 50 indicates an expansion in manufacturing activity, while a reading below that indicates a contraction.
The key indicator had slid for six months, with the last positive PMI recorded in April, when it stood at 50.4.
The October data also outperformed a forecast of 49.9 by analysts surveyed by Bloomberg.
The NBS said Thursday's data release showed the "business climate of the manufacturing industry has rebounded".
"The 50.1 level is the smallest possible expansion for the PMI but nonetheless bucks expectations for continued contraction," wrote Lynn Song, chief economist for Greater China at ING.
The latest data "is a positive sign that the small bounce back of industrial production that we saw in September could continue," Song added.
Beijing has in recent weeks unveiled a slew of measures to funnel cash into the economy, including several key rate cuts and looser restrictions on home-buying.
Zhang Zhiwei, president and chief economist of Pinpoint Asset Management, said in a note Thursday that he expected "economic momentum to improve moderately... as monetary and fiscal policies loosened".
But many investors say they are still waiting to see official confirmation of a major fiscal stimulus plan, expected to come at a meeting of top officials next week.
- 'Further improvement' -
The standing committee of the National People's Congress -- China's rubber-stamp parliament -- will gather in Beijing from November 4 to 8 for deliberations that state media say will involve economic planning.
"The PMIs have overstated the weakness in China's economy during the past year," wrote Julian Evans-Pritchard of Capital Economics in a note.
"Official surveys point to a further improvement in October, with an acceleration in manufacturing and services more than offsetting a further slowdown in construction," he added.
Beijing is targeting annual growth this year of around five percent -- a goal that officials have recently insisted is within reach.
The International Monetary Fund revised its forecast for China's growth this year down slightly to 4.8 percent in a report published last week.
Zhang, of Pinpoint Asset Management, wrote that he thought Beijing's growth goal has been "transmitted into actions", adding that he expects "more hints" on China's upcoming economic policy after next week's election in the United States.
Asian stocks uneven after shaky Wall Street lead
Hong Kong (AFP) Oct 31, 2024 -
Asian stocks got off to an uneven start on Thursday following a weak lead from Wall Street, though better-than-expected manufacturing data from China provided a glimmer of good news for Beijing.
Investors appeared to be in a wait-and-see mood ahead of a coin-toss US election, and after a widely expected decision by the Bank of Japan to leave its main interest rate unchanged.
The three main US stock indices lost ground on Wednesday, while major European markets closed sharply lower as well.
Tokyo followed that lead on Thursday, dragged down around one percent by a drop in stocks linked to the semiconductor industry, which also saw a dip on Wall Street.
The Bank of Japan said in an outlook report accompanying its rate decision that there were "high uncertainties surrounding Japan's economic activities and prices".
Its decision to stand pat came after an election that saw the ruling coalition lose its majority in the lower house for the first time since 2009.
Businesses and economists worry that Prime Minister Shigeru Ishiba will offer tax cuts and higher spending, and go slow on reforms needed to improve Japan's competitiveness as he seeks to court support from other parties.
There are also concerns that the government may pressure the BoJ to take a break from its gradual normalisation of its ultra-loose monetary policy, even if it leads to a weaker yen.
The bank raised borrowing costs in March for the first time since 2007, and did so again in July.
It signalled Thursday that it would raise rates yet again if inflation developed as it expected, and noted it was paying "due attention" to other economies, particularly the United States, where presidential elections take place on November 5.
Seoul was well down on Thursday, with Sydney, Wellington and Manila in the red as well.
"Asian equities are inheriting a wobbly baton today as earnings from US tech giants failed to deliver the expected boost," said Stephen Innes of SPI Asset Management. "Wednesday's session was a clear nod to pre-election de-risking."
Shanghai and Hong Kong, however, saw gains following a forecast-beating manufacturing report from China.
Factory output expanded this month for the first time since April, official data showed Thursday, rare good news for leaders struggling to boost activity in the world's second-largest economy.
The country is battling sluggish domestic consumption, a persistent crisis in the property sector and soaring government debt -- all of which threaten Beijing's official growth target of five percent for this year.
"The PMIs have overstated the weakness in China's economy during the past year," Julian Evans-Pritchard of Capital Economics said in a note.
"The good news is that, after turning a corner in September, the official surveys point to a further improvement in October, with an acceleration in manufacturing and services activity more than offsetting a further slowdown in construction."
Jakarta and Bangkok were also up, while Taipei was closed due to a typhoon.
Uncertainty over the outcome of the upcoming US elections, meanwhile, drove safe haven gold to a fresh high just shy of $2,790 an ounce on Thursday.
And oil prices continued their rebound in Asian trade, fuelled by good news on demand from the United States, as well as by press reports that OPEC countries are considering postponing an increase in crude supply.
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