China’s August factory activity picks up as demand improves: PMI

[BEIJING] China’s manufacturing sector expanded at a faster pace in August as output, new orders and exports all accelerated, a private-sector survey showed on Tuesday (Sep 1).

The RatingDog China General Manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 51.5 in August from 50.9 in July, staying above the 50-mark that separates growth from contraction. It also surpassed analysts estimates in a Reuters poll of 51.

Output rose at the fastest pace in three months, driven by stronger demand and capacity expansion, while new orders grew at a quicker rate on the back of the sharpest rise in new export business in six months.

Employment was unchanged after increases in June and July, but stronger demand pushed backlogs of work to their fastest accumulation since March.

Finished goods inventories grew at the sharpest rate since September 2025, and firms increased purchasing activity after scaling it back in July.

Input cost inflation edged up slightly from July, though S&P Global said cost pressures remained relatively modest. Manufacturers cut output prices for the first time this year, citing intense competition and promotional discounting.

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Weakening demand at home has strained a broader recovery in the US$20 trillion economy, and external uncertainties including trade tensions and geopolitical risks continue to cloud the outlook, pressuring demand.

The country’s GDP growth slowed to 4.3 per cent in the second quarter, the slowest in more than ​three years and below forecasts. It grew 5 per cent in the first quarter.

Looking ahead, factories remained optimistic about production over the next 12 months, but overall confidence slipped to its softest level since January, the survey showed. REUTERS