China’s economic recovery continues to stall as factory activity contracts for first time since April 2020

The Caixin/Markit manufacturing purchasing managers’ index (PMI) fell to 49.2 in August from 50.3 in July

In data released on Tuesday, China’s official manufacturing PMI dropped to 50.1 in August from 50.4 in July

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China’s Caixin/Markit manufacturing purchasing managers’ index (PMI) 49.2 in August from 50.3 in July, matching a fall in the official index. Photo: AP

Published: 9:55am, 1 Sep 2021Updated: 8:53am, 2 Sep 2021

China’s factory activity slipped into contraction in August for the first time in nearly one and a half years as coronavirus containment measures, supply bottlenecks and high raw material prices weighed on output in a blow to the economy.

The slowdown in the manufacturing sector underscores the fragility of the ongoing economic recovery and the impact of strict coronavirus curbs in the country, backing expectations Beijing will roll out more support measures to revitalise growth.

The Caixin/Markit manufacturing purchasing managers’ index (PMI) fell to 49.2 last month, from 50.3 in July, breaching the 50-mark that separates growth from contraction.

Two separate official surveys released on Tuesday showed China’s factory activity grew at a slower pace, while the services sector slumped into contraction. China’s official manufacturing PMI fell to 50.1 in August, from 50.4 in July, while the official non-manufacturing PMI fell to 47.5 in August from 53.3 in July.

The breakdown of both surveys points to a contraction in output last month. Supply bottlenecks are partly to blame

Julian Evans-Pritchard

“The surveys point to worsening supply shortages amid the Delta outbreak. But there are also signs that demand is weakening too. The average of the two [manufacturing surveys] is now under 50 and, apart from the pandemic hit last year, is now at its lowest since June 2019,” said Julian Evans-Pritchard, senior China economist at Capital Economics.