China Manufacturing Contraction Amid Weak Economic Momentum – PMI Insights

Saturday, 31 August 2024, 03:42

China manufacturing continues to experience contraction, with the PMI reflecting ongoing economic recovery challenges. The August PMI registered at 49.1, highlighting sluggish factory activity. As global economic conditions shift, analysts express concerns over future exports and fiscal policy.
South China Morning Post
China Manufacturing Contraction Amid Weak Economic Momentum – PMI Insights

China's Manufacturing Contraction Explored

China's factory activity remains in contraction for the fourth consecutive month, revealing persistent economic challenges. According to the National Bureau of Statistics, the official manufacturing purchasing managers' index (PMI) fell to 49.1 in August, down from 49.4 in July. This reading highlights the issues confronting China’s economic recovery as it fell short of Bloomberg's predicted increase to 49.5.

Key Economic Indicators

  • Manufacturing PMI indicates contraction below 50.
  • Export orders remain weak, with the subindex at 48.7.
  • UBS cut 2024 GDP growth forecast from 4.9% to 4.6%.

Zhang Zhiwei, chief economist at Pinpoint Asset Management, emphasized the necessity for a more supportive fiscal policy to stabilize China's economy. He noted, "The prevailing fiscal policy stance remains quite restrictive," further straining economic performance.

Non-Manufacturing Sector Insights

Despite the contraction in manufacturing, the non-manufacturing PMI remains at 50.3, slightly exceeding expectations. The construction subindex reported a decline to 50.6, while services improved slightly to 50.2.

China's overall economic momentum appears sluggish, with a growth rate of just 4.7% in the second quarter of 2023, pressuring various sectors, particularly manufacturing and exports. UBS anticipates enhanced fiscal support through 2024 as a response to these challenges.


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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