China's manufacturing sector starts to grow again: Caixin PMI

Manufacturing activity in China rose in August after a two-month contraction, with manufacturing output posting the fastest growth in five months, a survey by Caixin said on Monday.

The China Purchasing Managers Index (PMI), which provides an independent snapshot of the manufacturing sector's operating conditions, was raised to 50.4 in August from 49.9 the previous month.

The Caixin Index, one of the first monthly indicators available showing the latest economic conditions in China, is closely monitored by investors. A reading of 50 divides the expansion of the contraction. The higher the value above 50, the faster the expansion, the lower the value, the greater the contraction The manufacturing sector accounted for nearly 30% of China's GDP in the first half of this year, according to government data (link in Chinese).

"The Chinese manufacturing sector showed a recovery in August, mainly due to increased production activity," said Zhong Zhengsheng, director of macroeconomic analysis for the CEBM consulting group, a subsidiary of the Caixin Insight group. "However, overall demand has not improved and foreign demand has declined significantly, leading to an increase in product stocks."

Manufacturers' production has grown at the fastest pace since March, according to the survey. Companies that reported higher production generally tied this situation to stronger demand from customers, although the sluggish growth rate was below the historical average, according to the survey.

New orders from goods producers rose at a slower pace in August compared with the previous month, while new export orders fell at a record pace since November. trade dispute.

The survey indicates that the employment sub-index peaked in five months, standing at nearly 50, indicating that employment in the manufacturing sector was more or less stable in August.

Manufacturers' input costs and the prices they charge customers dropped last month. This indicates a downward trend in industrial prices, said Zhong.

The indicator of future production forecasts, which measures the degree of optimism or pessimism of manufacturers as to their production for the next 12 months, declined slightly in August, although it remained positive .

"The Chinese economy has shown signs of recovery in the near term, but downward pressures remain a long-term problem. In the midst of unstable Sino-US relations, China must step up its counter-cyclical policies, "said Zhong.

China's official manufacturing PMI, released Saturday by the National Bureau of Statistics, fell to 49.5 in August, from 49.7 in July.

Caixin's manufacturing PMI, sponsored by Caixin and compiled by the London data analysis company IHS Markit Ltd., is intended for light industry, while the official website focuses on the industry heavy. The geographical distribution of the companies covered by the two surveys is also different.

The publication of the Caixin China General Services business index for the month of August, which follows the evolution of the service sector, will be released on Wednesday.

Contact reporter Liu Jiefei ([email protected])