(Oct 31): China’s factory activity shrank in October, underscoring the challenges facing policymakers as they seek to sustain an economic recovery to ensure this year’s growth target is met.

The official manufacturing purchasing managers’ index fell to 49.3 from 50.1 in September, the National Bureau of Statistics said Saturday. That compares with the median forecast of 49.9 in a Bloomberg survey of economists. A reading above 50 indicates expansion.

The non-manufacturing measure of activity in construction and services came in at 49.7, versus 50.2 in September.

The deterioration suggests the world’s second-largest economy has lost some traction at the start of the fourth quarter, following a modest rebound in the prior three months. Beijing may face more pressure to provide additional support after introducing a fresh package of targeted stimulus measures in recent weeks, as policymakers seek to keep growth on track to meet the government’s annual target of 4.5% to 5%.

The government has already dialled up policies to bolster the economy, offering more credit support for small businesses and consumers, mortgage subsidies for some homebuyers and additional bond quotas for local governments. 

Construction on major infrastructure projects such as Six Networks has also been rolled out, and the authorities have signalled a willingness to introduce further measures if necessary.

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