China Manufacturing Contraction Highlights Weak Economic Momentum Amid PMI Declines

Saturday, 31 August 2024, 03:42

China's manufacturing contraction persists, raising concerns about economic recovery as the PMI drops to 49.1. This signal of reduced factory activity underscores the challenges facing China's economy.
South China Morning Post
China Manufacturing Contraction Highlights Weak Economic Momentum Amid PMI Declines

China Manufacturing Contraction Indicates Economic Challenges

China's manufacturing activity continues to face challenges, remaining in contraction for the fourth consecutive month in August. The official manufacturing purchasing managers' index (PMI) stood at 49.1, a slight decrease from July's 49.4, according to the National Bureau of Statistics. A PMI reading below 50 generally signals a contraction in economic activity, highlighting the ongoing struggles of China’s economy.

Economic Recovery Affected by Weak Exports and Fiscal Policy

Zhang Zhiwei, chief economist at Pinpoint Asset Management, suggests that recent economic momentum has weakened, partly due to a restrictive fiscal policy. He indicated that to stabilize the economy, financial support is essential. The new manufacturing export order subindex was reported at 48.7, reflecting a slight improvement but still below the expansion threshold.

Non-Manufacturing PMI Shows Mixed Results

In contrast, the non-manufacturing PMI, reflecting service and construction sentiment, edged slightly higher to 50.3 from 50.2 in July, remaining in expansion territory for the 20th consecutive month. However, the construction subindex demonstrated a decline to 50.6 from 51.2, suggesting mixed signals across sectors.

Growth Forecast Adjustment

UBS recently adjusted its forecast for China’s GDP growth in 2024 from 4.9% to 4.6%, citing weak domestic demand and a soft property market as primary concerns. Chief economist Wang Tao anticipates a shift towards more supportive policies in the latter half of 2024.


This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.


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