China September factory activity expands for first time in six months

China's factory activity expanded for the first time in six months in September, an official factory survey showed on Saturday, adding to a run of indicators suggesting the world's second-largest economy has begun to stabilise.

The official purchasing managers' index (PMI) rose to 50.2 in September from 49.7, according to the National Bureau of Statistics, edging above the 50-point level demarcating contraction from expansion. The reading beat a forecast of 50.0.

Beijing is seeking to get its economy back on track as it grapples with a property sector debt crisis that has rattled global markets. Policymakers have announced a series of piecemeal measures to shore up growth, including reducing the amount banks must hold in reserve and cutting mortgage rates.


Analysts, however, say more policy support will be needed to ensure China's economy can hit the government's annual growth target of about 5% this year.

China's factory output and retail sales grew at a faster pace in August, while declines of exports and imports narrowed and deflationary pressures eased.

But tumbling investment in the crisis-hit property sector continues to threaten prospects for the economy's recovery. New home prices fell at the fastest pace in 10 months in August and property investment declined for an 18th straight month.

The Asian Development Bank last week trimmed its economic growth forecast for China to 4.9% from 5.0% in July due to the weakness in the property sector. (Reporting by Ryan Woo and Joe Cash; Editing by Michael Perry)