China's slower factory growth eclipsed by robust services in boost to economic recovery

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freemexy

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China’s factory activity grew at a slower pace in August as floods across southwestern China disrupts production, but the services sector
expanded at a solid rate in a boost to the economy as it continues to
recover from the coronavirus shock.To get more China economy news, you can visit shine news official website.
The world’s second-biggest economy has largely managed to bounce back
from the health crisis, though intensifying Sino-U.S. tensions over a
range of issues and the global demand outlook remain a risk factor.
The official manufacturing Purchasing Manager’s Index (PMI) fell slightly to 51 in August from 51.1 in July, data from the National
Bureau of Statistics showed on Monday. It remained above the 50-point
mark that separates growth from contraction on a monthly basis.
Analysts had expected it to pick up a touch to 51.2.
China’s vast industrial sector is steadily returning to the levels seen before the pandemic paralysed huge swathes of the economy, as
pent-up demand, stimulus-driven infrastructure expansion and
surprisingly resilient exports propel a recovery, but the recovery
remains uneven.
A sub-index for the activity of small firms stood, however, at 47.7 in August, down from July’s 48.6, with over half of them reporting a
lack of market demand and more than 40% of them reporting financial
strains, Zhao Qinghe, a senior statistician with the NBS, said in a
separate statement.
“In addition, some companies in Chongqing and Sichuan reported an impact from the heavy rains and floods, resulting in a prolonged
procurement cycle for raw materials, reduced orders and a pullback in
factory production.”
The official PMI, which largely focuses on big and state-owned firms, also showed the sub-index for new export orders stood at 49.1 in
August, improving from 48.4 a month earlier and suggesting a bottoming
out in the contractionary trend after COVID hit.
“The growth engine is now clear. Overseas demand will only pick up slowly and travel restrictions will only be relaxed if COVID-19 cases
subside overseas. Until then China will rely more on its own for
economic growth,” said Iris Pang, Greater China chief economist at ING.
Economic indicators ranging from trade to producer prices all suggest a further pick up in the industrial sector. Profits at China’s
industrial firms last month grew at the fastest pace since June 2018,
data showed on Thursday.
Posted 02 Sep 2020

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