China's factory activity shrinks for second consecutive month
What's the story
China's manufacturing sector has witnessed a contraction for the second consecutive month, albeit at a lesser rate than market predictions. The official Purchasing Managers' Index (PMI) stood at 49.8 in August, an improvement from July's 49.2 and above the forecast of 49.6 by Reuters-polled economists. A PMI reading above 50 indicates expansion.
Economic slowdown
Economic slowdown and rising unemployment
China's economy has been under increasing pressure, with growth slowing to 4.3% in the second quarter, the slowest since late 2022.
The slowdown is attributed to weak domestic demand and a protracted property slump.
The situation worsened in the latter half of this year as consumer spending stalled, urban investment contracted faster, and unemployment rose.
Economic indicators
Export orders rebound to 50.1 in August
In July, both retail sales and industrial output slowed down, while growth in industrial profits hit its lowest this year.
However, exports have been one of the few things keeping China's economy afloat this year, with double-digit growth for most of the year.
New export orders bounced back to 50.1 in August from July's 49.6 despite global economic challenges due to prolonged Middle East turmoil.
Sector performance
Performance of high-tech equipment manufacturing
High-tech equipment manufacturing has outperformed the broader factory sector, with production and new orders readings for electronic machinery and equipment as well as computer communication devices sectors exceeding 53.
However, consumer goods production lagged at 49.
The non-manufacturing gage tracking construction and services activity remained unchanged at 49% in August, but the sub-index for construction industry fell by 0.1% points to 46.9%.