BEIJING?China's industrial sector picked up last month, with an official gauge of factory activity rising to its highest level in two years, driven by higher commodity prices and a property boom that are stabilizing the wobbly economy.
China's official manufacturing purchasing managers index increased to 51.2 in October from September's 50.4, the National Bureau of Statistics said Tuesday. The reading, the third straight month of expansion, beat a median forecast of 50.3 by 11 economists polled by The Wall Street Journal. The index has remained at or above the 50 mark that separates expansion and contraction for seven out of the last eight months.
The improvement appeared broad-based: subindexes for new orders and production all rose. An official index for nonmanufacturing activity also edged up, to 54.0 in October from 53.7 in September. A competing private gauge, the Caixin manufacturing PMI, also leapt higher, to 51.2 in October from 50.1 in September, Caixin Media Co. and research firm Markit said Tuesday.
"Property has helped the economy and we're seeing a lot of speculation in commodities," said Commerzbank AG economist Zhou Hao. "But this is not a turnaround. It just confirms stability and that the economy is not as risky as earlier expected."
Mr. Zhou and other economists said recent economic stability, after years of downward drift, is largely the result of stepped up fiscal spending and easy money policies that have fueled strong real estate activity in top markets. Infrastructure investment rose 19.4% in the first three quarters, according to official statistics.
Also pushing up the manufacturing index last month, which rose to its highest level since July 2014, were higher priced commodities such as coking coal, thermal coal and iron ore.
October's elevated PMI reading isn't likely to last long, some economists said. While higher commodity prices are good for raw material suppliers, they could hurt factory owners down the road, said RHB Group economist Zhang Fan. "I think it's more likely a one-off jump," he added.
In a bid to dampen speculative pressure in a property market that has seen price increases of more than 40% year-over-year in some cities, local governments in recent weeks have rolled out selective mortgage and other restrictions. This appears to be having some impact. In the first three weeks of October, the volume of property deals increased by 7.9% month-over-month in 30 major cities compared with more than double-digit growth in previous months.
Liyan Qi contributed to this article.
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(END) Dow Jones Newswires
October 31, 2016 23:35 ET (03:35 GMT)Copyright (c) 2016 Dow Jones & Company, Inc.