China’s private manufacturing sector expanded at a stronger pace in August, supported by improving output and new orders.
The RatingDog Manufacturing Purchasing Managers’ Index (PMI) climbed to a two-month high, signaling better demand conditions across privately owned factories.
RatingDog Manufacturing PMI Rises to 51.5
The RatingDog Manufacturing PMI increased to 51.5 in August, up from 50.9 in July, according to data compiled by S&P Global.
The result matched market expectations and remained above the key 50.0 level, which separates expansion from contraction.
Manufacturing conditions have now improved for nine consecutive months. This represents the longest period of sustained growth in around five years.
New Orders and Export Demand Strengthen
New orders increased for a 15th consecutive month, while the pace of growth accelerated compared with July.
Export demand also showed notable strength. New export business expanded at its fastest rate in six months, providing additional support for manufacturers.
The stronger flow of orders helped boost production. Factory output increased for a ninth consecutive month and recorded its fastest expansion since May.
Manufacturing Costs Continue to Rise
Despite improving demand, manufacturers continued to face cost pressures.
Input-price inflation accelerated for the first time since April as raw-material costs increased. Higher prices for metals and oil were among the main factors driving expenses higher.
However, manufacturers reduced their output prices for the first time this year. Intense competition and promotional activity limited companies’ ability to pass higher costs on to customers.
China’s Domestic Demand Remains a Concern
Although the private manufacturing sector showed signs of improvement, weak domestic demand continues to weigh on China’s broader economic recovery.
Trade tensions and geopolitical uncertainty have also created additional risks for manufacturers and complicated the outlook for future demand.
These factors could remain important as businesses assess production levels, investment and hiring over the coming months.
RatingDog PMI Contrasts With Official China PMI
The RatingDog PMI data contrasted sharply with China’s official manufacturing PMI released a day earlier.
Government figures showed that manufacturing activity remained in contraction territory, highlighting a noticeable divergence between the two surveys.
The difference partly reflects the types of companies included in each index.
China’s official PMI focuses more heavily on large and state-owned manufacturers, while the RatingDog PMI gives greater weight to smaller and privately owned factories.
As a result, the two surveys can sometimes provide different signals about the health of China’s manufacturing sector.
