Affected by recent high temperatures and heavy rainfall, as well as the production off-season in some industries, the manufacturing PMI continued to decline in August.

Data released by the National Bureau of Statistics on August 31st showed that the manufacturing Purchasing Managers' Index (PMI) for August was 49.1%, a decrease of 0.3 percentage points from the previous month, and has been below the boom-or-bust line for four consecutive months.

Zhang Liqun, a special analyst at the China Federation of Logistics and Purchasing, stated that the PMI index continued to fall below the boom-or-bust line in August, indicating an increased downward pressure on the economy. Demand-related indices are all below the boom-or-bust line and show a trend of further downward fluctuation; the proportion of enterprises reflecting insufficient demand continues to rise, and there is a possibility of further development of the problem of insufficient demand. Constrained by insufficient demand, the production of enterprises shows a downward trend. The production index has fallen below the boom-or-bust line, the purchase volume index continues to fall below the boom-or-bust line, and the business operation expectation index has also declined, indicating an overall converging trend in the production and operation activities of enterprises.

Zhang Liqun stated that the overall imbalance of supply exceeding demand is more apparent, and the price-related indices have significantly decreased below the boom-or-bust line. It is necessary to significantly enhance the counter-cyclical adjustment strength of macroeconomic policies, expand the scale of government public product investment, effectively and forcefully drive an increase in enterprise orders, warm up production and operation activities, and quickly reverse the market-guided demand contraction and economic downward trend.

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Both production and demand have slowed down.

In August, continuous high temperatures and heavy rainfall in many places, and the off-season characteristics of the basic raw material industry, have had a certain impact on the overall operation of the manufacturing industry.

The production index for August was 49.8%, a decrease of 0.3 percentage points from the previous month, falling below 50% after operating in the expansion range for five consecutive months; the new order index was 48.9%, a decrease of 0.4 percentage points from the previous month.

Looking at specific industries, in August, the petroleum processing and coking industry, non-metallic mineral products industry, ferrous metal smelting and rolling industry, and non-ferrous metal smelting and rolling industry all showed a more noticeable slowdown compared to the previous month, which is an important reason for the synchronous slowdown of supply and demand in the manufacturing market. However, there are also positive factors on the demand side; the new export order index was 48.7%, an increase of 0.2 percentage points from the previous month, and has been rising for two consecutive months, showing a stabilizing trend in manufacturing exports.

Wen Tao, an expert at the China Logistics Information Center, stated that a prominent highlight in August for the manufacturing industry was the rapid recovery of new drivers, which has better supported the relatively stable operation of the manufacturing industry.

Data shows that the PMI for the equipment manufacturing industry was 51.2%, an increase of 1.7 percentage points from the previous month, with both the production index and new order index rising by 3 percentage points to above 52%; the PMI for high-tech manufacturing was 51.7%, an increase of 2.3 percentage points from the previous month, with the production index rising by more than 3 percentage points to above 51%, and the new order index rising by about 5 percentage points to above 53%.Wen Tao believes that, considering the previous trend and policy factors, the new momentum of the manufacturing industry rebounded quickly after a short-term slowdown last month, with significant growth on both the supply and demand sides. On one hand, this is due to the strong resilience and vitality of China's manufacturing industry's new momentum. On the other hand, the effects of policies such as large-scale equipment upgrades and the replacement of old consumer goods with new ones are gradually becoming apparent. As the new momentum develops positively, China's industrial structure continues to optimize steadily. In terms of sub-industries, the automotive manufacturing industry, electrical machinery and equipment manufacturing industry, and the computer, communication, electronic equipment, and仪器仪表 manufacturing industry show relatively prominent operational trends, with a more noticeable rebound compared to the previous month.

Corporate costs have been somewhat alleviated. Looking at the scale of enterprises, the PMI for large enterprises is 50.4%, a slight decrease of 0.1 percentage points from the previous month, continuing to play a supporting and leading role. The PMI for medium and small enterprises are 48.7% and 46.4%, respectively, decreasing by 0.7 and 0.3 percentage points from the previous month, indicating that the production and operational pressure on small and medium-sized enterprises has increased.

In terms of prices, in August, due to a slowdown in manufacturing production activities, coupled with ample raw material supply, the price of raw materials purchased by enterprises has significantly decreased. At the same time, due to a slowdown in market demand, the price of products leaving the factory has also significantly decreased. The purchase price index in August was 43.2%, a decrease of 6.7 percentage points from the previous month; the factory price index was 42%, a decrease of 4.3 percentage points from the previous month.

Wen Tao analyzes that, from the perspective of the industrial chain, the significant decrease in manufacturing market prices is mainly driven by the large decline in the prices of basic raw materials at the front end. In August, the purchase price index and the factory price index for high-energy-consuming industries both operated below 40%, and both decreased by more than 10 percentage points from the previous month, leading to a general decrease in raw material procurement prices for downstream industries.

Data shows that the proportion of manufacturing enterprises reflecting high raw material costs is 40.4%, a decrease of 3.1 percentage points from the previous month. In addition, the proportion of manufacturing enterprises reflecting high logistics costs and high labor costs are 26.7% and 29.8%, respectively, decreasing by 1.1 and 0.9 percentage points from the previous month. Combined, the costs for manufacturing enterprises have been somewhat reduced.

Wen Tao stated that, judging from the recent trend of the manufacturing PMI, although the current economic operation has some fluctuations, the overall trend of stable development has not changed. As the impact of high temperatures and heavy rains subsides, production and construction operations and consumption scenarios in various regions are steadily recovering. Some industries will enter their peak seasons, and with the current policies to stabilize the economy and promote growth being intensified, the policy effects will further emerge. The economy has a foundation for stable recovery in the later period.