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China manufacturing
EconomyEconomic Indicators

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

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

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A worker assembles a carbon fibre bicycle at a production workshop in China’s Shandong province. Photo: Xinhua
Sherry Wangin Beijing
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.

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