Photo:Xinhua

China's manufacturing sector performed better than expected in October, a closely-watched private survey showed on Friday.

The Caixin/Markit manufacturing PMI rose for a fourth consecutive month, climbing to 51.7 in October, up from 51.4 in September and higher than an earlier forecast of 51, according to a joint press release from Caixin and Markit.

A PMI reading above 50 suggests expansion, while readings below that level point to contraction.

October also marked the third continuous month of expansion in terms of factory activity.

The Caixin/Markit PMI reading also suggested factory activity fared better than the official reading had suggested.

The official manufacturing PMI came in at 49.3 in October, down from 49.8 in September, according to the National Bureau of Statistics.

This official PMI focuses on large corporations and State-owned enterprises, while the Caixin/Markit survey covers a mix of small and medium-sized companies.

Analysts at Caixin/Markit attributed the expansion to a "significant improvement" in demand, as the sub-index for new orders rose to its highest level in February 2013.

Caixin and Markit additionally stated that this month showed the strongest improvement in operating conditions by Chinese manufacturers since February 2017.

Following the release of the Caixin/Markit PMI, Chinese stocks rallied on Friday, with the Shanghai Composite Index surging 0.99 percent to close at 2958.20 points and the Shenzhen Component Index rising by 1.73 percent to close at 9802.33.

The improved factory activity comes as China and the US appear to be moving toward an interim trade agreement, after the US launched its trade war with China 16 months ago. US officials seem to be anxious to reach a deal, while Chinese officials appear cool-minded.

In what appears to be a bid to quell concerns over a trade deal following the cancellation of the APEC summit in Chile, US President Donald Trump said in a tweet on Thursday that China and the US were working toward finding new location for the signature of a phase one trade deal. He added that the new location "will be announced soon."

Chinese and US negotiators are scheduled to hold a telephone conversation on Friday.

Global Times