China’s factory activity records slow growth in August
China’s factory activity expanded at a slower rate in August. It was attributed to prolonged COVID-19 restrictions, expensive raw material costs, and the economy’s disrupted momentum.
A Reuters poll of 33 economists showed a median forecast of the official manufacturing Purchasing Manager’s Index (PMI) dropping to 50.2 in August from July’s 50.4, pointing to a five-straight-month decline in expansion.
Profits have also been hit by higher raw material costs, particularly for metals and semiconductors. In July, earnings for China’s industrial enterprises fell for the fifth month in a row.
Analysts at Barclays expected the manufacturing and service PMIs to moderate this month.
China’s economy recovered from a pandemic-driven collapse, but it has shown some weaknesses due to local virus outbreaks, weak exports, stronger policies to control rising property prices, and an effort to limit carbon emissions.
The People’s Bank of China (PBOC) reduced banks’ cash reserves to aid the economy, allocating about 1 trillion yuan ($6.47 trillion) in long-term liquidity.