China’s factory activity returns to growth, but new export orders sound alarm: Caixin PMI

China’s Caixin/S&P Global manufacturing purchasing managers’ index rose to 50.4 in August as new orders drove production.

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Workers assemble parts at a children wheels factory in Pingxiang County in northern China’s Hebei province. Photo: Xinhua

Published: 9:57am, 2 Sep 2024Updated: 10:00am, 2 Sep 2024

China’s manufacturing activity swung back to growth in August as new orders drove production, a private sector survey showed on Monday, supporting employment and lifting confidence about the outlook.

However, the first decline in new export orders in eight months sounded the alarm following tamer exports data in July, adding to concerns about the outlook as the Christmas goods shipment peak started.

The Caixin/S&P Global manufacturing purchasing managers’ index (PMI) rose to 50.4 in August from 49.8 the previous month, beating analysts’ forecasts in a Reuters poll for a reading of 50.

The reading, which mostly covers smaller, export-oriented firms, was more upbeat than an official PMI survey on Saturday, which showed manufacturing activity extended declines in August.

New orders increased last month after falling in July, driving up production gain for a 10th successive month, the Caixin survey showed. Firms in the consumer and intermediate goods sectors, in particular, led the output growth.

Deterioration in external demand led to new export orders falling for the first time in eight months and at the fastest pace since November 2023.

Exports have been a recent spotlight, shoring up the world’s second-largest economy as domestic consumption waned and a property crisis hurt business and household confidence.