China PMIs point to continued slowdown in August amid dearer energy, Covid restrictions

China's National Bureau of Statistics reported an improvement in its manufacturing sector Purchasing Managers' Index from a reading of 49.0 for July to 49.4 in August (consensus: 49.2).

A rise in the new orders sub-index from 48.5 to 49.2 was responsible for part of the improvement in the headline index, Craig Botham, chief China+ economist at Pantheon Macroeconomics.

However, Botham believed that new orders were likely higher due to the need to restock inventories, which were running at a two-year low.

Hence any improvement was unlikely to last more than a month or two.

Similarly, the worsening in the sub-index linked to supplier delivery times was probably the result of energy shortges and not booming demand, he added.

Furthermore, all the main subindices remained below the 50.0 point threshold which denoted a decline in output from one month to the next.

It was a similar story outside of manufacturing.

The non-manufacturing PMI printed at 52.6, ahead of consensus for a reading of 52.3 but nonetheless below the 53.8 recorded in July, reflecting a slower pace of growth, albeit not a contraction.

Services accounted for the bulk of the slowdown with the sector PMI slipping from 52.8 to 51.9 as the country continued to fight against outbreaks of Covid, Botham said.

A separate PMI for construction fell from 59.2 to 56.5, prompting Botham to muse that the government's infrastructure push was losing momentum with the property sector dragging on activity.