China’s economic activity remained under pressure in August, as official purchasing managers’ index data released by the National Bureau of Statistics on August 31 showed persistent contraction in manufacturing and subdued conditions in services and construction.
The official manufacturing PMI fell to 49.1 in August from 49.4 in July, marking the fourth consecutive month below the 50-point threshold that separates expansion from contraction. The production sub-index slipped to 49.8 from 50.1, while new orders fell to 48.9 from 49.3, pointing to softer domestic demand. New export orders also contracted, easing to 48.1 from 48.5, suggesting continued external headwinds. Meanwhile, the non-manufacturing PMI, which covers services and construction, was reported at 49.0, unchanged from July, indicating a mild downturn in activity across sectors such as retail, transportation and real estate.
In contrast, the Caixin/S&P Global manufacturing PMI, which focuses on smaller export-oriented firms, rose to 50.4 in August from 49.8 in July, returning to expansionary territory and highlighting an uneven recovery between large state-owned enterprises and private exporters.
The persistent weakness reflects subdued consumer demand and a sluggish property market. The construction sector has been particularly hampered by the prolonged real estate downturn, which has weighed on new orders and business activity. Analysts expect Beijing to introduce additional monetary easing, including possible cuts to the reserve requirement ratio or benchmark lending rates, along with fiscal measures such as increased infrastructure spending and consumer stimulus. Financial markets reacted moderately, with Chinese equities slightly lower in early trading and the yuan stable against the dollar. The data also weighed on global growth sentiment, given China’s role in world trade and commodity demand.
