China’s economy faces challenges even as it ‘holds steady’: 4 takeaways from August’s PMIs

If you would like to see more of our reporting, please consider subscribing.

1. Mixed manufacturing message

China’s official manufacturing purchasing managers’ index (PMI) slipped to a six-month low of 49.1 in August, down from a reading of 49.4 in July.

The survey of sentiment among factory owners fell short of a survey by Bloomberg. A reading above 50 typically indicates an expansion of economic activity, whereas a reading below implies a contraction.

But the Caixin/S&P Global manufacturing PMI – which mostly covers smaller, export-oriented firms – rose to 50.4 in August from 49.8 the previous month, beating analysts’ forecasts.

“The Caixin manufacturing PMI for August returned to expansionary territory, but the growth was limited. Considering the government’s ambitious annual economic growth target, the challenges and difficulties in stabilising growth over the coming months will be substantial,” said Wang Zhe, senior economist at Caixin Insight Group.

Gabriel Ng, assistant economist at Capital Economics, said the average across the two gauges “rose a touch” from 49.6 to 49.7.