Key Points
- Private factory PMI rises to 51.5 in August
- Official PMI remains below 50-point expansion threshold
- Weak domestic demand continues to weigh on recovery
BEIJING: China’s manufacturing activity strengthened in August with output, new orders and exports accelerating on the back of improving demand in the world’s second-largest economy.
According to a private-sector survey released Tuesday, the RatingDog China General Manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 51.5 in August from 50.9 in July.
The reading remained above the 50-point threshold separating expansion from contraction and exceeded the 51.0 median forecast in a Reuters poll.
The survey showed factory output increased at its fastest pace in three months, supported by stronger demand and expanded production capacity.
New orders also grew at a faster rate, with new export business recording its sharpest increase in six months.
The improvement in export demand offers some support to China’s manufacturing sector. However, weak domestic consumption and prolonged weakness in the property market continue to constrain broader economic activity.
The official manufacturing PMI, however, presented a more cautious picture.
The index compiled by China’s National Bureau of Statistics and the China Federation of Logistics & Purchasing rose to 49.8 in August from 49.2 in July, although it remained below the 50-point threshold.
The official survey showed the new orders index climbed to 50.6 from 48.5 in July. It reflected a significant improvement in market demand. The production index also moved above the threshold from 49.9 to 50.4.
The improvement was broadest among larger manufacturers. The PMI for large enterprises rose to 50.6, moving further into expansion territory. But the reading for medium-sized firms fell to 49.4, and the index for small enterprises stood at 47.9.
The private survey provided further evidence of stronger external demand.
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New export business rose at its fastest rate in six months, helping manufacturers increase purchasing activity after cutting it in July.
China demand remained unchanged
Employment, however, remained unchanged in the private survey. The stronger flow of new orders pushed manufacturers’ work backlogs to the fastest accumulation since March.
Manufacturers also reported a sharp increase in finished-goods inventories, with stockpiles rising at their fastest rate since September 2025.
Input cost inflation edged higher, but remained relatively modest, according to the survey.
Factory-gate prices fell for the first time this year as manufacturers faced intense competition and increased promotional discounting.
The development highlights continued pricing pressure despite the improvement in production and orders.
China’s services sector also remained under pressure. The official non-manufacturing business activity index stayed at 49.0 in August, unchanged from July.
The services activity index was 49.3, also unchanged, while the construction sector index slipped to 46.9.
The official non-manufacturing new orders index fell to 44.1 from 44.4, indicating continued weakness in market demand.
Employment also remained weak, with the non-manufacturing employment index at 45.4.
The contrasting PMI readings underline the uneven nature of China’s economic recovery. The private survey points to renewed momentum in manufacturing, particularly in export-oriented industries, but the official data indicate that the industrial economy has yet to return consistently to expansion.
China’s economy grew 4.3 per cent year-on-year in the second quarter, slowing from 5.0 per cent in the first quarter and marking its weakest quarterly growth in more than three years.
Policymakers have introduced measures to support consumption, investment and business activity, but domestic demand remains a major challenge. The prolonged property downturn has also weighed on household confidence and investment.
The private survey showed manufacturers remained optimistic about production over the coming 12 months, but overall business confidence fell to its weakest level since January.
The latest data therefore offer a mixed signal for China’s economy. Stronger export orders and factory production provide evidence of renewed industrial momentum, but weak domestic demand, pricing pressure and subdued confidence continue to point to a fragile recovery.
