Two key surveys tracking the performance of China’s industrial sector diverged in August, offering conflicting accounts of how Chinese factories are dealing with ongoing trade threats and the prospect of cooling domestic demand.
The official Purchasing Managers’ Index (PMI) inched up to 51.3 from 51.2 last month, beating a market forecast of 51.0 based on a poll of industry experts.
A breakdown of the data shows that the growth came largely from stronger output, with the Production sub-index rising to 53.3 in August from 53.0 for the January-July period. There is also potential for this trend to continue in the short term as exports are front-loaded ahead of further US tariffs.
The Caixin unofficial PMI, meanwhile, dropped to a 14-month low of 50.6 from 50.8, dipping beneath the 50.7 market forecast.
“This slowdown appears, on balance, to have continued last month, most likely on the back of a further deceleration in credit growth and infrastructure investment,” wrote Julian Evans-Pritchard, Senior China Economist at Capital Economics. “And while the policy easing now underway should eventually put a floor beneath growth, the usual lags involved mean that growth will continue to cool heading into next year.”