China’s manufacturing Purchasing Manager’s Index (PMI) for August was at 51.0 as compared to 51.1 in July, according to the National Bureau of Statistics.

 

A PMI reading above 50 indicates expansion, however, the country marginally missed its targeted pace of expansion in August due to heavy rains and flooding. China continues to recovery and has witnessed strong domestic demand in August. Heavy rains and flooding significantly impacted economic activities in China’s southern provinces. 

 

The country’s official non-manufacturing PMI settled at 55.2 in August as compared to 54.2 in July. This indicates faster growth in the services sector. 

 

China recorded a significant rise in new orders for products such as pharmaceuticals and electrical machinery in August than in July. The country has also recorded expansion in manufacturing activity and industrial output for the fourth straight month in July.

 

Rebound in domestic demand 

China’s PMI dropped to a record low in February amid the COVID-19 pandemic which disrupted downstream demand. Globally, factories were shut due to large scale lockdowns to control the spread of the virus. However, mills have been raising output gradually on recovering domestic demand in China. Also, the Chinese government provided prudent fiscal support to spur infrastructure investment and stimulate economic growth. The short-term outlook for growth in China remains positive. With consistent investment-led rebound, consumer sentiment and household spending are expected to improve in China in the coming months, as per industry sources. 

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