China’s manufacturing activity unexpectedly returned to growth in August, growing fastest since Feb, showed private survey
DATA MACRO
China’s manufacturing activity unexpectedly returned to growth in August, growing fastest since Feb, showed private survey
DATA MACRO

China’s manufacturing activity unexpectedly returned to growth in August, growing fastest since Feb, showed private survey

 

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China’s factory activity unexpectedly returned to expansion in August, with supply, domestic demand and employment improving, according to a private survey showed on Friday.

The Caixin/S&P Global manufacturing purchasing managers’ index (PMI) rose to 51 in August from 49.2 in July, beating analysts’ forecasts of 49.3 and marking the highest reading since February. The 50-point index mark separates growth from contraction.

The data came a day after an official survey which is more focused on large companies and state-owned enterprises showed manufacturing activity contracted for a fifth straight month, through shrinking at a slower pace.

The sub-indexes for production and new orders both returned to expansionary territory, wile overseas demand remained weak, with the sub-index for new export orders picking up slightly within the contractionary territory, showed the survey. 

The gauge for employment returned to expansion for the first time in six months and hit the highest level since April 2010, driven by improvement in manufacturing production and market demand. 

The sub-index for purchase prices of raw materials returned to expansion for the first time since April, while products’ factory-gate prices picked up slightly within the contractionary territory.

“The slight rise in prices buffered the pressure of deflation, logistics remained smooth, inventory of raw materials fell, and manufacturers held on to their optimism, although to a limited extent,” said Wang Zhe, an economist at Caixin Insight Group. Positive sentiment hit an 11-month low.

“Looking ahead, seasonal impacts will gradually subside, but the problem of insufficient internal demand and weak expectations may form a vicious cycle for a longer period of time,” Wang said.

As authorities ramp up support for the sputtering economy, two of China’s biggest cities eased mortgage curbs on Wednesday and the finance ministry extended tax preferential policies for homebuyers, foreign workers and small firms.

China’s central bank and financial regulator on Thursday issued notices to ease some borrowing rules to aid homebuyers, including lowering the existing mortgage rate for first-home buyers and the down payment ratio in some cities.