(Yicai) Nov. 1 -- Activity in China’s manufacturing sector increased in October after contracting in the prior month, following the roll out of the country’s biggest economic stimulus package since the pandemic.

The Caixin manufacturing purchasing managers’ index came in at 50.3 for last month, up from 49.3 the month before, according to data released today by financial media group Caixin. A reading above 50 indicates expansion.

That tallies with the official manufacturing PMI published by the National Bureau of Statistics yesterday, which rose to 50.1 from 49.8, ending five straight months of contraction.

October’s data shows that demand has stabilized and optimism is recovering, said Wang Zhe, senior economist at Caixin Insight Group. The effects of recently announced policy support are also beginning to show, he added.

The central government has introduced a major stimulus package since the end of September, with the aim of boosting growth in the world’s second-largest economy and buoying the struggling property market.

Still, it remains to be seen how effective this will be in expanding domestic demand, promoting employment, and safeguarding people's livelihoods, Wang said, adding that to drive a sustainable recovery in consumer demand, policies should aim to markedly boost disposable household income.

New orders placed with manufacturers rose to the highest in four months in October, according to Caixin’s figures. The companies surveyed said that improvements in demand fundamentals and effective business development initiatives had supported a rebound in new business.

Despite the pickup in overall demand, external demand contracted for the third month in a row. New export orders were the highest in three months, but remained in contraction territory. Most firms reported that the weakening global economic environment has led to a decrease in export orders.

Employment conditions in manufacturing also continued to deteriorate, declining for a second consecutive month to the lowest level since June 2023, as firms remain cautious about taking on more workers.

Business sentiment rose to a five-month high, but is still below the long-term average. The surveyed companies hope that an improved economic environment and the introduction of new products will boost future sales.

Editor: Tom Litting