China's manufacturing PMI rose to 49.8 points in August — ECNS
China's official manufacturing purchasing managers' index rose to 49.8 points in August from 49.2 points in July. At the same time, the indicator remained below the 50-point mark for the second consecutive month, indicating a contraction in activity in the sector. This was reported by ECNS, citing data from China's National Bureau of Statistics.
Demand and production
The improvement in the index was primarily driven by stronger demand. The new orders sub-index rose by 2.1 points in August to 50.6 points, returning to expansion territory.
The production sub-index increased from 49.9 points in July to 50.4 points in August, also returning to expansion territory. The new export orders index gained 0.5 points to reach 50.1 points.
China Minsheng Bank Chief Economist Wen Bin said that domestic demand improved noticeably after the impact of extreme heat and heavy rainfall weakened, as well as due to more active implementation of policies supporting domestic demand.
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Fiscal support
On August 1, updates to a package of six coordinated fiscal and financial measures took effect in China. The package, for which the central government allocated 100 billion yuan, or $14.8 billion, provides for broader coverage of loan interest subsidy programs, more participating financial institutions, and higher loan and subsidy limits.
Deputy Finance Minister Liao Min said that the authorities are working on additional coordinated fiscal and financial measures to be introduced in the second half of the year. Wang Qing, chief macroeconomic analyst at Orient Golden Credit Rating International, warned that the recovery in domestic demand remains fragile and requires further policy support.
High-tech manufacturing
The business activity index in high-tech manufacturing stood at 52.9 points in August. In equipment manufacturing, it also remained in expansion territory at 51.4 points.
China's Ministry of Commerce, together with six other government agencies, released recommendations on expanding and upgrading the consumption of goods. The document provides for increasing total retail sales of goods to approximately 60 trillion yuan by 2030.
