China’s Manufacturing Activity Contracts Again In August Despite Slight Output Gains

China’s manufacturing sector stayed in contraction territory in August, though the pace of decline eased slightly.

The official Purchasing Managers’ Index (PMI) stood at 49.4, up 0.1 points from July, according to data released by the China's National Bureau of Statistics (NBS) on Sunday (31 August).

This comes amid China's ongoing trade talks with the United States ahead of a new November tariff deadline.

China has faced difficulties in sustaining a robust post-pandemic recovery, weighed down by a property sector debt crisis, weak domestic consumption, and persistently high youth unemployment.

Its export-driven economy has also been pressured by trade tensions with the United States, which remain paused as both sides await a potential agreement.

A PMI reading above 50 indicates expansion, while a reading below 50 suggests contraction.

The last time China recorded a figure above 50 - indicating growth - was in March.

NBS statistician Zhao Qinghe said the improvement reflects accelerated production, the growing role of the high-tech industries, and more positive business expectations, Global Times reported.

The production sub-index climbed to 50.8, up 0.3 points from the previous month, indicating faster output, while the new orders index increased marginally to 49.5, suggesting demand is stabilising but still weak.

High-tech manufacturing showed particular resilience, registering a PMI of 51.9, up 1.3 points from July, underscoring its growing role in industrial growth.

Business confidence improved, with the production and business activity expectation index reaching 53.7, up 1.1 points, reflecting optimism among manufacturers about near-term prospects.

Outside manufacturing, the non-manufacturing sector continued to expand, with its PMI standing at 50.3 in August, up 0.2 points.

Services activity reached 50.5, led by strength in capital markets, transport, and telecommunications.

Business activity in capital market services remained above 70 for the second month in a row, reflecting strong momentum.

Overall, the composite PMI, which combines both manufacturing and non-manufacturing data, stood at 50.5 in August, 0.3 points higher than July.

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