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China’s manufacturing factory activities pick up, exports remain under pressure

China’s factory activities picked up slightly in August, with the manufacturing purchasing managers’ index (PMI) coming in at 51.3, beating expectations of 51 and higher than 51.2 one month earlier, shows data released by the National Bureau of Statistics on Friday.

For a breakdown, the readings for production activities and purchase volume of raw materials picked up in August, while new orders saw a slowdown, said the National Bureau of Statistics.

High-technology manufacturing remained a main driver, with the PMI for the sectors rising to 54.3 in August from 52.6 one year earlier and 51.9 in July. In particular, pharmaceutical companies, special equipments manufacturers, computer and telecommunications companies saw more robust activities, according to the NBS.

One thing to note is the rising price level which increases risk of stagflation, warns the Guotai Junan Securities. The sub-readings for the purchase prices of raw materials and products’ factory gate prices surged in August, bringing for the factors to 58.7 and 54.3 respectively.

China’s manufacture PMI sub-readings for factory gate prices (blue bar) and raw material purchase prices (red bar

Heightened uncertainty from escalating trade tensions is still a major drag, bringing the sub-readings for new export orders and imports to 49.4 and 49.1, compared with 49.8 and 49.6 one month earlier.

The official non-manufacturing PMI picked up to 54.2 in August, compared to 54 one month earlier, indicating a faster expansion of service sectors, according to the NBS.

Boosted by more travels in the summer season, retails, railway and airway transportation and tourism sectors saw robust activities, while securities, insurance and logistics saw cooling activities, shows the data.

Hit by high temperature as well as rainstorms, construction sectors saw activities slow in August.

On the same day, data released by the China Steel Logistics Professional Committee shows that the PMI for the steel sector came in at 53.4 in August, significantly lower than 54.8 one month earlier. New export orders, raw material purchase volumes and purchase prices show pickup, while sub-readings for production and inventory retreated.

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