China says manufacturing activity expanded in August, slightly missing expectations

CNBC reports that China on Monday announced that manufacturing activity expanded in the month of August as the country continued to recover from the coronavirus pandemic. 

The official manufacturing Purchasing Manager’s Index (PMI) for the month of August came in at 51.0 as compared to 51.1 in July, according to the National Bureau of Statistics.

However, the pace of expansion missed expectations. Analysts polled by Reuters had expected August PMI to come in at 51.2.

PMI readings above 50 indicate expansion, while those below that signal contraction. PMI readings are sequential and indicate on-month expansion or contraction.

Heavy floods in south China have also impacted manufacturing activity, Zhao Qinghe, a senior statistician with the bureau, said in a statement.

Growth in services moved at a faster clip in August with the official non-manufacturing PMI coming in at 55.2 as compared to 54.2 in July.

Zhao from the National Bureau of Statistics said in his report that demand was gradually recovering, with new orders for products such as pharmaceuticals and electrical machinery and equipment moving at a faster pace in August than in July. Exports were also improving in general, added the bureau.

China’s manufacturing sector was battered earlier this year as factories shut due to large-scale lockdowns to contain the coronavirus pandemic.

But recent data out of China paint a picture of recovery, with expansion in manufacturing activity and industrial output rising for the fourth straight month in July.

“Manufacturing rebounded most quickly. It didn’t require as much social distancing, it wasn’t as sensitive to social distancing so activity was rebounding more quickly there, and as such is now decelerating after the initial strong rebound,” said Andrew Tilton, chief Asia Pacific economist at Goldman Sachs.