China's September official PMI steady at 51.1

Growth in China's manufacturing sector steadied in September as an official Purchasing Managers' Index (PMI) hovered at 51.1, a touch ahead of forecasts and welcome news for some investors who fear the Chinese economy is cooling too fast. -- PHOTO: R
Growth in China's manufacturing sector steadied in September as an official Purchasing Managers' Index (PMI) hovered at 51.1, a touch ahead of forecasts and welcome news for some investors who fear the Chinese economy is cooling too fast. -- PHOTO: REUTERS 

BEIJING (Reuters) - Growth in China's manufacturing sector held up in September but remained subdued in a sign that the world's second-largest economy is still struggling to recover its growth momentum.

The official Purchasing Managers' Index (PMI) hovered at 51.1, the National Bureau of Statistics said on Wednesday, indicating a modest expansion in activity and a touch ahead of forecasts for a 51.0 reading.

The data came a day after China cut mortgage rates for the first time since the 2008 global financial crisis to boost its flagging economy, and reinforced a view among some analysts that sluggish domestic demand and a cooling property market were dragging on activity.

"We see the risk of third-quarter gross domestic product growth slowing to 7 per cent" from 7.5 per cent in the second quarter, economists at ANZ Bank said in a note to clients, noting that growth in China's crude steel output fell to the year's low in the first 20 days of September.

"Weakness in the property market and rising credit risks in the commodity sector will continue to weigh on the economy," the ANZ economists said.

Unsteady - albeit strengthening - export sales, softening domestic investment and the property slowdown have all dragged China's economy through a rough year, leading investors to bet on further policy loosening by authorities to lift growth.