Growth in China's factory activity slows in Aug, floods disrupt production
31 August, 2020
China's factory activity grew at a slower pace in August as floods across southwestern China disrupts production while smaller businesses continued to struggle, potentially tempering a robust recovery for the economy from the coronavirus shock.
The state manufacturing Purchasing Manager's Index (PMI) fell slightly to 51 in August from 51.1 in July, data from the National Bureau of Statistics showed on Monday (Aug 31).
It remained above the 50-point mark that separates growth from contraction monthly.
Analysts had expected it to get an impression to 51.2.
China's vast professional sector is steadily time for the levels seen before the pandemic paralysed huge swathes of the economy, as pent-up demand, stimulus-driven infrastructure expansion and surprisingly resilient exports propel a recovery, however the recovery remains uneven.
A sub-index for the activity of small organizations stood at 47.7 in August, down from July's 48.6, with over half of these reporting too little market demand and a lot more than 40 per cent of these reporting financial strains, Zhao Qinghe, a senior statistician with the NBS, said in another statement.
"Furthermore, some companies in Chongqing and Sichuan reported an impact from the heavy rains and floods, producing a prolonged procurement cycle for recycleables, reduced orders and a pullback in factory production."
The state PMI, which largely targets big and state-owned firms, also showed the sub-index for new export orders stood at 49.1 in August, bettering from 48.4 per month earlier and suggesting a bottoming out in the contractionary trend after COVID hit.
Economic indicators which range from trade to producer prices all suggest a further pick up in the professional sector. Profits at China's commercial firms last month grew at the most effective pace since June 2018, official data showed on Thursday.
Investment bank HSBC expects China's economy would grow by 5.4 % in the 3rd quarter from the same period this past year, followed by a 6.2 per cent expansion in the fourth quarter, returning China's growth to pre-COVID levels.
However, many analysts fear that the recovery could stall, hurt by rising tensions between Washington and Beijing and as another wave of local infections returns in the winter.
The economy, which grew 3.2 per cent in the second quarter year-on-year, is defined to expand 2.2 per cent this season - the weakest in over three decades.
A high decision-making body of China's ruling Communist Party said last month that Beijing will ensure adequate policy support for the economy in the next half.
In the services sector, activity also expanded for the sixth straight month, as authorities lift nationwide COVID-19 restrictions on public gatherings, bolstering consumer demand.
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