Source: Sharecast
The RatingDog China general manufacturing purchasing managers' index - formerly known as the Caixin PMI - compiled by S&P Global, rose to a five-month high of 50.5 from 49.5 in July, coming in above expectations for a reading of 49.7.
A reading above 50 indicates expansion, while a reading below signals contraction.
RatingDog said manufacturing production returned to growth on the back of rising new orders. Meanwhile, the rate of contraction in new export business eased from July. As a result of rising inflows of new work, purchasing activity and inventories expanded, while unfinished business increased.
Business confidence also rose, but firms remained cautious about staff hiring.
Yao Yu, founder at RatingDog, said the latest upturn "resembled a breath of relief rather than a sustained rally".
"It’s positive to see output bounce back above the 50 no change mark after July’s dip, and new orders picked up, pushing inventories of raw materials and finished goods higher. New export orders are still in contraction, but the pace of decline has eased," he said.
"That’s encouraging, yet we shouldn’t get carried away, because external demand looks partly pulled forward while domestic demand stays soft, so the upside to output may be limited unless domestic demand firms up.
"Besides, input prices continued to rise under the ‘Antiinvolution’ policy backdrop, and those upstream increases are finally showing up in output prices, breaking an eight-month streak of falling charges. Still, profit trends interpreted from the PMI data showed only a slight recovery and remain under pressure overall.
"Notably, the manufacturing sector is helping the recovery, but this rebound is patchy. With weak domestic demand, potentially overstretched external orders, and slow profit recovery, the durability of the improvement depends on whether exports truly stabilize and whether domestic demand can pick up pace."
Meanwhile, the official purchasing managers’ index released on Sunday came in at 49.4 for August, down from 49.3 in July.
