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Sherry Wang

China’s factory activity improved in August but remained in contraction territory for a second straight month, as a pickup in orders could not fully offset the impact of overall weak domestic demand and disruptions from extreme weather.
The manufacturing purchasing managers’ index (PMI) was 49.8 in August, up from 49.2 in July, according to data released by the National Bureau of Statistics (NBS) on Monday. The reading was largely in line with the 49.85 projection from economists polled by the financial data provider Wind.
The monthly index measures factory activity through surveys of supply chain managers across various sectors. A reading above 50 indicates expansion, while one below 50 signals contraction. The index ended a four-month expansionary streak in July.
The new orders subindex, a gauge of manufacturing demand, rose to 50.6 in August from 48.5 in July, while a separate measure for new export orders came in at 50.1, up from 49.6 a month earlier.
“The overall business climate in manufacturing improved visibly in August, with 16 out of 21 surveyed industries registering month-on-month gains,” said Huo Lihui, an NBS statistician, in a statement.
Huo noted that “both production and demand expanded in tandem,” anchored by solid gains in hi-tech manufacturing and large firms.
“The data came in a little stronger than market expectations,” said Lynn Song, chief economist for Greater China at ING, adding this could set the stage for a slight recovery in the industrial production growth data for August, scheduled for release in a few weeks.
“The data suggested better activities in August, which will weaken the necessity of stimulus going forward,” said Xing Zhaopeng, a senior China strategist at ANZ Research.


However, he pointed out that service and construction activities remained subdued due to adverse weather.
“Looking ahead, we expect targeted policy supports [are] more likely,” Xing said.
The figures come as weak domestic demand continues to weigh on the growth of the world’s second-largest economy, which slowed to 4.3 per cent in the second quarter of this year.
In July, growth in both retail sales and industrial output slowed, while overall fixed-asset investment – which covers areas including manufacturing and property construction – weakened further.
Extreme weather has added to the pressure on businesses. A series of typhoons, influenced in part by El Nino, hit parts of China this month, bringing heavy rain and flooding that disrupted commercial activities and stalled construction projects.
Beijing has pledged to step up macroeconomic support and accelerate fiscal spending to counter sluggish growth. In August, authorities expanded eligible loans and raised maximum loan caps for smaller businesses under a national interest-subsidy scheme.
Meanwhile, China’s non-manufacturing PMI – which tracks activity in the services and construction sectors – was 49 in August, unchanged from July.
Elsewhere, China’s official composite PMI – which tracks economic activity in both manufacturing and non-manufacturing sectors – came in at 49.5 in August, compared with 49.3 in July.


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The PMI index was up last month to 49.8 from 49.2 in July, according to figures from the National Bureau of Statistics


The PMI index was up last month to 49.8 from 49.2 in July, according to figures from the National Bureau of Statistics.


China’s factory activity improves in August, but stays in contraction

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}The PMI index was up last month to 49.8 from 49.2 in July, according to figures from the National Bureau of Statistics

The PMI index was up last month to 49.8 from 49.2 in July, according to figures from the National Bureau of Statistics