China's Manufacturing Activity Contracts Less Than Expected in August
China’s manufacturing activity shrank for the second consecutive month in August, but at a slower pace than expected. The official Purchasing Managers' Index (PMI) rose to 49.8 from 49.2 in July, surpassing economists’ forecasts of 49.6. Despite this slight improvement, China’s economy continues to face challenges with weak domestic demand and an ongoing property market slump contributing to slower growth. The country's GDP grew at its weakest rate since late 2022 during the second quarter, at 4.3%. Consumer spending has stalled, urban investment is declining faster than before, and unemployment remains a concern. While exports have provided some support due to strong global demand for Chinese tech goods linked to AI infrastructure growth, domestic economic indicators like retail sales and industrial output remain weak. Chinese policymakers are considering new measures including fiscal stimulus or monetary easing but economists expect the scale of such interventions will be limited.
