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China PMI August 2023

China: Manufacturing PMI rises in August; non-manufacturing PMI slips

The National Bureau of Statistics’ Manufacturing Purchasing Managers’ Index (PMI) rose to 49.7 in August from July’s 49.3. August’s result marked the best performance since March. As such, the index moved closer to the 50.0 no-change threshold, signaling a softer deterioration in manufacturing sector operating conditions compared to the previous month. The reading was due to improvements in indices for production, new orders and purchasing activity.

The National Bureau of Statistics’ non-Manufacturing PMI clocked in at 51.0 in August, down from July’s 51.5. A downturn in the services PMI more than offset improved construction activity, with the latter likely linked to more local-government backed projects.

While the manufacturing PMI overshot market expectations, the non-manufacturing PMI undershot expectations. Taken together, the readings show that the economy remains downbeat midway through Q3, weighed on by weak sentiment, Western trade restrictions and turmoil in the property sector.

On the near-term outlook, Nomura analysts said:

“We expect the manufacturing PMI to remain soft, weighed on by the significant collapse of the property sector and rising geopolitical headwinds. The services PMI will likely decline further on fading tourist activity following the release of pent-up demand over the summer. Of note, the new orders PMI index for the services sector dipped further into contractionary territory in August, falling to 47.4 from 48.4 in July. Overall, we believe China’s growth is still under notable pressure.”

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