China’s Purchasing Managers’ Index (PMI)—a composite indicator designed to provide a single-figure snapshot of operating conditions in the manufacturing economy—rose from 49.9 in July to 50.4 in August, signaling a renewed improvement in the overall health of the sector in China. It is the strongest improvement recorded since March.

Operating conditions faced by Chinese manufacturers improved slightly in August, with firms registering the quickest increase in production for five months. New order intakes were meanwhile broadly stable, despite a faster decline in export sales, Report said on General Manufacturing for the month of August 2019.

“The improved production trend led firms to expand their purchasing activity further, while stocks of finished goods rose for the first time this year to date. Prices data showed a renewed fall in input costs contributed to a stronger decline in output charges. At the same time, sentiment regarding the 12-month outlook for output softened to a level that was among the lowest in the series history, with optimism dampened by worries over the future trading relationship of China and the US, as well as signs of weaker global conditions,” the report said.

“China’s manufacturing sector showed a recovery in August, mainly due to improved production activity. However, overall demand didn’t improve, and foreign demand declined notably, leading product inventories to grow. There was no sign of an improvement in companies’ willingness to replenish inventories of inputs or in their confidence. Industrial prices trended down. China’s economy showed signs of a short-term recovery, but downward pressure remains a long-term problem. Amid unstable Sino-American relations, China needs to step up countercyclical policies,” Dr. Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group, said.