China Factory Outlook Slips in August Amid Slow Recovery

  • Bloomberg
  • Economic Indicators News
China Factory Outlook Slips in August Amid Slow Recovery
Credit: © Reuters.

(Bloomberg) -- A gauge of China’s manufacturing activity declined slightly in August, fueling concerns that the pace of China’s economic recovery may have peaked.

  • The official manufacturing purchasing managers’ index moderated to 51 from 51.1 a month earlier, lower than the 51.2 median estimate of economists, data released by the National Bureau of Statistics showed Monday.
  • The non-manufacturing gauge rose to 55.2 from July’s 54.2, much stronger than the projected 54.2. A reading above 50 indicates improving conditions.

Key Insights

  • China’s economy continued to recover from the slump in the first quarter, with government-led investment boosting demand and reopening of overseas economies buoying the export sector.
  • Heavy flooding in central and southern China temporarily disrupted some transport and production activities, but hasn’t had a major impact on the economy.
  • Services industries are picking up as the government eases virus control measures, with more sub-sectors such as cinemas reopened for business.
  • “As the impact of flooding subsided, production should continue to recover,” Citi economists led by Johanna Chua wrote in a report before the data was released. “New export orders may remain resilient, benefiting from the reopening of major trading partners.”

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  • A sub-index of new export orders for factories rose to 49.1, and new orders also increased to 52.
  • A sub-index of manufacturing employment trended higher to 49.4 from 49.3.
  • A set of early indicators suggested China’s economy picked up speed in August, aided by a strong industrial sector and stock market, better business confidence and home and car sales.

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