China's Manufacturing PMI Comes At 49.7 In August, Marking 5th Consecutive Monthly Fall

The world's second-largest economy, China recorded higher-than-expected manufacturing PMI of 49.7 in August 2023. The latest reading also marks the fifth straight month where the country's manufacturing PMI has stayed below the 50-point level.

The manufacturing PMI in August inched closer to expansion compared to the 49.3 reading in July. Also, it came in better than market estimates ranging from 49.3 to 49.5.

The last time China's manufacturing PMI stood above a 50-point level was in March 2023 at 51.9. A PMI data above 50 points, indicates that the manufacturing activity is expanding, while figures below that level refer to contraction.

Trading Economics highlighted that the latest print pointed to the fifth straight month of fall in factory activity, but the softest pace in the sequence amid various stimulus measures from Beijing to revive a recovery in the economy.

In August 2023, new orders expanded for the first time in five months (50.2 versus 49.5 in July) and output grew the most in five months (51.9 50.2).

However, in the month under review, export sales (46.7 versus 46.3) and employment (48.0 versus 48.1) fell for the fifth consecutive month. Also, delivery time shortened to 51.6 as against 50.5, as per the data.

On the contrary, buying activity stood at 50.5, rising for the first time since March and also higher from 49.5 in July.

Further, output charges picked up for the first time in six months to 52 compared to the previous standing point of 48.6%. Additionally, business sentiment improved reaching to six-month high of 55.6 against 55.1 in the previous month.

On Thursday, the Hong Kong and Chinese shares traded on a bearish note. The Hang Seng index dipped 45 points or 0.24%, while the mainboard Shanghai Composite index slipped by 18.6 points or 0.6% at the time of writing.

Bloomberg reported today that August may have marked the darkest hour before dawn for China's battered equity markets, with some investors pinning hopes that Beijing's recent efforts to boost confidence will bear fruit in the coming days.

The report highlighted that the CSI 300 Index, the benchmark of onshore Chinese shares, tumbled by 5.8% so far this month, heading for its biggest decline since October last year. With a decline of 7%, an index of the nation's stocks listed in Hong Kong is among the worst performers in 92 global equity gauges tracked by Bloomberg. Cheaper valuations and bets of more stimulus measures are giving bulls reasons to be optimistic again.