China’s manufacturing rebounded in August but outlook across Asia still remains weak

Caixin/Markit factory Purchasing Managers’ Index (PMI) improved to 50.4 in August from 49.9 in July, rising into expansion for the first time in three month

But factory output for manufacturing heavyweights Japan, South Korea and Taiwan continued to plunge due to weakening demand caused by the US-China trade war

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South Korea’s factory activity also shrank in August and contracted for a fourth consecutive month, according to the Nikkei/Markit PMI, which hit 49.0, from 47.3 in July. Photo: Bloomberg

Published: 2:32pm, 2 Sep 2019Updated: 10:32pm, 2 Sep 2019

China’s manufacturing activity surprisingly expanded in August, according to findings from a private survey released on Monday, even as factory output in the region continued to contract amid the escalating trade war with the United States and overall sluggish global demand.

The Caixin/Markit factory Purchasing Managers’ Index (PMI) improved to 50.4 in August from 49.9 in July, beating the expected 49.8 based on a poll compiled by Reuters, and rising into expansion for the first time in three months. A reading above 50 indicates expansion, while below 50 points to contraction.

New orders stayed in expansionary territory in August, but inched down from July, suggesting flat demand for manufactured products, said Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group, a subsidiary of Caixin.

“China’s manufacturing activity showed a recovery in August, mainly due to improved production activity,” Zhong said. “However, overall demand didn’t improve, and foreign demand declined notably, leading product inventories to grow. There was no sign of an improvement in companies’ willingness to replenish inventories of inputs or in their confidence. Industrial prices trended down.”

Zhong said the unexpected rise in manufacturing activity in August reflected signs of a short term rebound, but pressure on output in the long term still remained because of US-China trade war.