China's August Manufacturing PMI at 49.8, Still in Contraction

[Financial News] China's manufacturing purchasing managers’ index (PMI), which fell sharply in July, rebounded in August and came in above market expectations.
However, it remained in contraction territory. In particular, the non-manufacturing PMI, which covers construction and services, came in at 49.0, unchanged from the previous month and the lowest level of the year.  
According to the National Bureau of Statistics of China (NBS) on the 31st, the August manufacturing PMI stood at 49.8.
That was up 0.6 points from the previous month’s 49.2, which had marked a five-month low, and it also exceeded the median forecast of 49.5 compiled by Bloomberg News analysts, compared with 49.6 in a Reuters survey.
The PMI, based on a survey of corporate purchasing managers, is a key gauge of economic activity. A reading above the benchmark of 50 indicates expansion, while a reading below 50 signals contraction.
China's manufacturing PMI stayed below 50 for eight straight months from April to November last year, before rebounding to 50.1 in December. It then slipped back into contraction at 49.3 in January and 49.0 in February this year.
The five major manufacturing PMI sub-indexes rebounded in August, led by the new orders index.
The new orders index rose 2.1 points from the previous month to 50.6. The production index, at 50.4, was up 0.5 point, and the supplier delivery time index, at 50.1, rose 0.6 point, both above the benchmark.
By contrast, the raw materials inventory index, which tracks major input stockpiles, fell 0.2 point from the previous month to 48.1, while the employment index, which reflects labor conditions, dropped 0.3 point to 48.7.
Amid weak domestic demand, the gap between advanced manufacturing and consumer goods manufacturing remained evident. 
By sector, equipment manufacturing came in at 51.4, unchanged from the previous month, and high-tech manufacturing stood at 52.9, down 0.4 point, both continuing to perform well in August. Consumer goods manufacturing rose 1.2 points to 49.0, while high-energy-consuming manufacturing increased 0.9 point to 47.9, showing signs of recovery.
Although they remained in contraction, the figures were seen as a sign that the economy was beginning to recover.
The non-manufacturing PMI, which covers construction and services, came in at 49.0, unchanged from the previous month. That was below the market forecast of 49.4.
China's non-manufacturing PMI started the year at 49.4 in January and 49.5 in February, then rebounded to 50.1 in March. It slipped to 49.4 in April, recovered again to 50.1 in May and 50.2 in June, but fell sharply to 49.0 in July, the lowest level in a year.
Against the backdrop of a sluggish property market, the construction business activity index fell 0.1 point from the previous month to 46.9, while the services business activity index held steady at 49.3.
The composite PMI, which combines manufacturing and non-manufacturing, came in at 49.5, up 0.2 point from July's 49.3.  


[email protected] Reporter Lee Seok-woo, International Reporter