China: Holding steady in August – UOB Group

The China Federation of Logistics and Purchasing (CFLP) business surveys improved marginally in August while the private sector RatingDog China manufacturing PMI unexpectedly returned to expansion at 50.5 in August (Bloomberg est: 49.8, July: 49.5). The CFLP PMIs which tend to relate more closely with the broader economy, indicate the lack of new growth catalysts as domestic and external demand continue to face headwinds. Earlier data in July showed a broad-based slowdown in industrial production, retail sales, fixed assets investment and surveyed jobless rates, UOB Group's economist Ho Woei Chen notes.

China PMIs show tepid August recovery

"The CFLP manufacturing PMI rose 0.1 pt to 49.4 in August (Bloomberg est: 49.5, July: 49.3). This marked the fifth consecutive month that the index is in contraction (reading<50) since the US President Trump’s announcement of the reciprocal tariffs in Apr."

"Within the manufacturing PMI, production (50.8 from 50.5 in July) expanded at a faster pace. New orders (49.5 from 49.4 in July) and new export orders (47.2 from 47.1 in July) inched up 0.1 pt but remained in contraction. Despite a pickup in manufacturing activity, employment (47.9 from 48.0 in July) weakened slightly in August. By enterprise size, the large-sized enterprises (50.8 from 50.3 in July) continued to outperform. The outlook for medium-sized enterprises (48.9 from 49.5 in July) and small-sized enterprises (46.6 from 46.4 in July) stayed in contraction in August."

"The CFLP non-manufacturing PMI added 0.2 pt to 50.3 in August (Bloomberg est: 50.2, July: 50.1). Improvements in the services index (50.5 from 50.0 in June) cushioned the slump in the construction index (49.1 from 50.6 from in July) which registered its first contraction in seven months, with weakness contributed by the adverse weather conditions."