Chinese workers at an automobile factory in Liuzhou in the Guangxi Zhuang autonomous region. [photo/CFP]Beijing - China's manufacturing expanded at the fastest pace in four months in September, adding to signs that economic growth is stabilizing even as the government curbs energy use and tries to cool the property market.
The purchasing managers index (PMI) rose to 53.8 from 51.7 in August, China's logistics federation and statistics bureau said on Friday in a statement.
The data reinforced evidence from a separate purchasing manager survey two days ago that China's industries are gearing up again after the economy slowed in the second quarter.
Bank of America-Merrill Lynch said that officials might accelerate gains by the yuan as domestic demand strengthens and the US maintains pressure for a stronger currency.
"Today's better-than-expected PMI number suggests that China's economy has regained strength on a strong pick up in domestic orders and a steady increase in external demand," said Liu Ligang, a Hong Kong-based economist at Australia & New Zealand Banking Group Ltd.
Copper climbed to a 26-month high on the manufacturing data and a weaker dollar. Asian stocks rose. Chinese markets are closed for a holiday.
The manufacturing index released this week by HSBC Holdings and Markit Economics rose to the highest in five months. The nation's growth may be aided in coming months by government plans to speed the completion of stimulus projects and boost public housing construction.
In Friday's data, an output index rose to 56.4 from 53.1 in August. A measure of new orders gained to 56.3 from 53.1 and an export-order index climbed to 52.8 from 52.2.
Economic growth "has stabilized after falling from a high level" and the nation's slowdown will be limited by continued gains in consumption, investment and exports, Zhang Liqun, a researcher at the Development Research Center of the State Council, said in a statement.
The PMI's rebound suggests Chinese businesses have recovered confidence lost because of Europe's debt crisis and property tightening measures, said Lu Ting, a Hong Kong-based economist for Merrill. So far, real-estate restrictions have had a limited impact on developers' construction activity, he added.
On Sep 29, China's government added to curbs by tightening down-payment rules for first homes, suspending third-home loans and pledging to quicken a trial of a property tax. In a separate campaign, officials are shuttering factories to meet energy-reduction and pollution targets.
In contrast to measures cooling growth, China's top economic planner, the National Development and Reform Commission, last month urged the speedy completion of projects under a two-year stimulus plan that ends this year.
Gains in domestic consumption, including auto sales, are supporting manufacturing, with carmakers including PSA Peugeot Citroen, Toyota Motor Corp and Nissan Motor Co boosting capacity or planning new models.
Rebounding property sales since August have aided developers including Soho China Ltd, which said on Wednesday that it reached a full-year sales target ahead of schedule.
Still, areas of weakness remain. Friday's data showed contractions in output in the metal product and textile industries.
The PMI, released this week by the Beijing-based China Federation of Logistics and Purchasing and the National Bureau of Statistics, covers more than 820 companies in 20 industries, including energy, metallurgy, textiles, automobiles and electronics.
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