China’s official factory gauge rose to a five-year high, signaling that efforts to clean up the financial sector and the environment aren’t damping economic growth yet.

Key Points

• The manufacturing purchasing managers index rose to 52.4 in September, compared with a projected 51.6 in Bloomberg’s survey and 51.7 in August
• The non-manufacturing PMI stood at 55.4 compared with 53.4 a month earlier
• Numbers higher than 50 indicate improving conditions

Big Picture

The world’s second-largest economy has shown signs of cooling after posting faster-than-expected expansion of 6.9 percent in both of the first two quarters of the year. The impact of a government drive to cut excess capacity in sectors such as steel and shut polluting industries is being felt in the second half, and may color discussion of economic policy at the Communist Party Congress from Oct. 18.

Economist Takeaways

“This showed that China’s growth engine is still strong despite the cooling economic activity we saw in July and August,” said Wen Bin, an economist at China Minsheng Banking Corp. in Beijing. “As an early indicator, the PMI readings should show that economic restructuring is making positive impact.”

The Details

• New growth drivers such as high-end manufacturing are gaining momentum, the National Bureau of Statistics said in a statement
• Consumption manufacturing being boosted ahead of week-long Autumn holidays in early October, NBS said