China manufacturing stagnates, says factory index

A gauge of factory activity shows China’s economy still struggling for momentum despite stimulus measures.

Chinese workers produce rubber thongs for export. Pic: AP

The Caixin China manufacturing purchasing managers’ index, a private gauge of nationwide factory activity, fell in August, still showing a stagnation, Caixin Media and research firm Markit said.

The index weakened to 50.0 from 50.6 in July, but remained above the 50 watershed for the second straight month.

Before July’s surprise jump, the index had shown activity shrinking each month from February 2015. The slightly lower PMI shows that China’s economy is still struggling to gain momentum after a raft of stimulus measures by the government to prop up growth.

The 50 mark separates an expansion in manufacturing activity from a contraction.

Sub-indexes of output, new orders and stocks of purchase all declined from the previous month, Caixin said.

“The stagnation that follows tentative signs of recovery in July may have been caused by a temporary tightening of proactive fiscal policies. Downward pressure on China’s economy remains, and government support to stabilise growth must continue,” said Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group.

China’s official manufacturing PMI, a competing gauge, offered a conflicting view of factory activity, coming in at 50.4 in August compared with 49.9 in July, according to data from the National Bureau of Statistics.

The Caixin China Manufacturing PMI is based on data compiled from monthly replies to questionnaires sent to purchasing executives at more than 400 manufacturing companies.