Private survey points to robust August manufacturing activity

China's manufacturing sector saw faster expansion in August — the most robust in two months — as production and market demand firmed and overseas orders picked up, a private survey showed on Tuesday.

The strong performance, combined with a better-than-expected rise in the official manufacturing gauge, raised expectations of a modest pickup in industrial activity in August following some moderation in July, analysts said.

The RatingDog China General Manufacturing Purchasing Managers' Index, a privately surveyed barometer of the sector's health, climbed to 51.5 in August from 50.9 in July. The increase kept the index above the 50-point threshold for a ninth straight month, extending its longest expansionary run in five years.

Much of the acceleration came from stronger demand, with total new orders rising more quickly than in July and extending their growth streak to 15 months — the longest since 2018 — RatingDog said in its report on Tuesday.

In particular, new export business rose at its fastest pace in six months, with consumer goods manufacturers reporting especially strong growth, the survey said.

"Resilient exports have helped buoy manufacturing activity," said Lou Feipeng, a researcher at Postal Savings Bank of China.

Meanwhile, factory output rose for a ninth straight month, posting its fastest increase in three months on stronger demand and expanded capacity, the survey showed.

"The pace of manufacturing expansion quickened in August, with demand, output and exports all accelerating. Faster growth in new orders and strong export expansion sent positive signals," said Yao Yu, founder of Rating-Dog.

Yao said the manufacturing PMI was likely to remain in expansionary territory in the near term.

The official manufacturing survey, released by the National Bureau of Statistics on Monday, painted a similar picture. Stronger demand helped lift the headline PMI to a better-than-expected 49.8 in August from 49.2 in July, though the index remained in contractionary territory for a second straight month.

The new orders subindex jumped 2.1 percentage points to 50.6, returning to expansionary territory, the NBS said.

Li Chao, chief economist at Zheshang Securities, attributed much of the rise in the headline PMI to a sharp rebound in new orders.

"New orders also outpaced production, suggesting that demand is beginning to recover," Li said.

The rebounding official PMI reading indicates that industrial output could see "a modest uptick" in August, said Lynn Song, chief economist for China at Dutch bank ING. China's industrial output grew 4.5 percent year-on-year in July, slowing from 5.3 percent in June, NBS said.

Looking ahead, manufacturers remained confident that output would rise over the coming year, citing stronger customer demand, an improving economic backdrop and plans to expand capacity and upgrade technology. Overall optimism, however, eased in August, the survey showed.

Despite manufacturers' continued optimism, signs of mounting pressure on margins reinforced the case for continued policy support to bolster demand and stabilize expectations. Input cost pressures rose in August, even as Chinese manufacturers cut selling prices amid intense competition, the RatingDog survey showed.

Lou of Postal Savings Bank of China called for measures to stabilize foreign trade, cushion the impact of export volatility and sustain the pickup in new export orders.

"Foreign trade has helped underpin economic growth this year, and that momentum should be sustained in the second half," said Yin Yanlin, deputy director of the Committee on Economic Affairs of the 14th National Committee of the Chinese People's Political Consultative Conference.

zhangchenxu@chinadaily.com.cn