Market Outlook Also Falls Short
The manufacturing Purchasing Managers' Index (PMI), which indicates China's economic trends, has shown 'economic contraction' for four consecutive months.
On the 31st, China's National Bureau of Statistics announced that the manufacturing PMI for August this year recorded 49.1, down 0.3 from the previous month. The PMI statistics, based on surveys of purchasing managers in companies, serve as an indicator of economic trends. A value above 50 indicates economic expansion, while below 50 signifies economic contraction.
China's manufacturing PMI was below the benchmark of 50 for five consecutive months: 49.5 (October last year) → 49.4 (November) → 49.0 (December) → 49.2 (January this year) → 49.1 (February), before surpassing the benchmark in March for the first time in half a year, entering an economic expansion phase. It maintained above 50 until April (50.4), but in May it fell to 49.5, returning to an economic contraction phase. June maintained the same 49.5 as May, but in July and August it dropped further by 0.1 and 0.3 respectively compared to the previous month, remaining below 50 for four consecutive months. By company size, the PMI for large enterprises in August (50.4, down 0.1 from the previous month) exceeded the benchmark, but the PMI for medium-sized enterprises (48.7, down 0.7) and small enterprises (46.4, down 0.3) remained below the benchmark.
All five major indices that make up the manufacturing PMI fell short of the benchmark. The production index dropped 0.3 from the previous month to 49.8. Along with the production index, three indices declined compared to the previous month: new orders index (48.9, down 0.4), raw material inventory index (47.6, down 0.2), and employment index (48.1, down 0.2). Only the delivery index (49.6, up 0.3) rose compared to the previous month.
A senior statistician at the National Bureau of Statistics Service Industry Survey Center analyzed, "The manufacturing economy in August was somewhat contracted due to seasonal factors such as high temperatures and heavy rains, as well as the off-season production period in some industries."
The non-manufacturing PMI for China in August was recorded at 50.3, up 0.1 from the previous month. The non-manufacturing PMI measures activities in construction and service industries. The non-manufacturing PMI fell by 1.1 from 50.6 in October last year to 49.5 in November, and further dropped to 50.2 in November. However, it recovered to 50.4 in December, 50.7 in January this year, and 51.4 in February. The non-manufacturing PMI rose to 53 in March, then slowed down in April, but slightly rebounded in August, maintaining an economic expansion phase.
China set its economic growth target for this year at around 5%, the same as last year. The Chinese authorities have introduced domestic demand stimulation policies such as renewing consumer goods and production facilities to achieve the growth target. However, ongoing trade frictions with Western countries including the United States, and the sluggish recovery of the real estate sector, a core part of China's economy, have made it difficult to revitalize the overall economy.
China's second-quarter economic growth rate came in at 4.7%, significantly below the market forecast of 5.1%, raising concerns about achieving the 'around 5%' growth target set for this year. In particular, despite the Chinese Communist Party holding the 3rd Plenary Session of the 20th Central Committee last month and announcing mid- to long-term economic measures, there are observations that the economy has not fully escaped its slowdown.
Swiss global investment bank UBS recently lowered its forecast for China's economic growth rate this year from 4.9% to 4.6%, citing the real estate slump and other factors.
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