The Chinese manufacturing sector expanded again in September, according to a new survey.

The state-produced Purchasing Managers’ Index (PMI) stood at 50.4 in September (a figure above 50.0 indicates growth); this reading matched the prediction in a Reuters poll. The PMI fell below 50 in July, before recovering in August.

New export orders increased in September, rising to 50.1 (from the previous month’s 49.7).

Output rose to 52.8 (from 52.6 in August), but the index for total new orders slipped to 50.9 (from 51.3).

A sub-index for smaller firms fell, while performance at larger companies improved.

Sectors such as high-tech, automotive manufacturing and ship building showed strong expansion, the survey shows. Jobs were again lost, though at a slower pace, with the employment sub-index increasing to 48.6 (compared to 48.4 in August).

Industrial over-capacity remains one of the main drags on economic growth, according to economic analysts, and China has pledged to quicken the pace of its industrial-capacity cuts, particularly in steel.

Last month, its state planners rejected a request by steel makers for coal mines to increase their output of coking coal to help ease a supply ‘tightness’ that has triggered a ‘price rally’.