Over the weekend we had the official PMIs showing manufacturing contracting:

  • The manufacturing result at 49.1 marks a six-month low and the fourth consecutive month below the 50-point threshold that separates expansion from contraction.

While today it was the other manufacturing PMI, the private survey indicated slight expansion, returning to growth:

The Caixin index tends to focus more on small, export-oriented firms, suggesting that these smaller manufacturers are showing resilience. According to Caixin, factory production increased for the 10th straight month in August, driven by growth in consumer and intermediate goods sectors.

  • Total new orders returned to growth, although export orders declined for the first time in eight months

  • Employment also showed signs of stabilization after 11 months of contraction, reflecting the modest recovery in output and demand

Businesses expressed only cautious optimism about the 12-month market outlook, with some lingering concerns about future output.

Key challenges, such as insufficient domestic demand, continue to weigh on the sector, according to Wang Zhe, a senior economist at Caixin Insight Group. Wang noted that while recent data on industrial production, consumption, and investment indicate a trend of stabilization, the overall economic performance remains weaker than expected. He emphasized the increasing urgency for China to enhance policy support and ensure the effective implementation of earlier measures.