China says manufacturing activity expanded in August, slightly missing expectations

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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.

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.

The National Bureau of Statistics said in their report of the PMI data 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.

The recovery in China is driven partly by government stimulus spurring infrastructure investment and resilient exports as medical supplies shipments jumped in the first half of the year.

Another set of factory data will be released on Tuesday by Caixin and IHS Markit. This private survey features a bigger mix of small- and medium-sized firms. In comparison, the official PMI survey typically polls a large proportion of big businesses and state-owned companies.

This is breaking news. Please check back for updates.

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