China manufacturing index slumps, shrinks in August—gov’t

Chinese workers man a production line in this undated file photo. Data from August showed a slowdown and contraction in manufacturing in the world’s second largest economy. AP

BEIJING, China — Chinese manufacturing activity fell into contraction in August, an official index showed Monday, the figure slumping to a three-year low in the latest sign of slowing growth in the world’s second-largest economy.

The official Purchasing Managers’ Index (PMI) came in at 49.7 last month, the National Bureau of Statistics said in a statement.

The reading, which tracks activity in China’s vast factory and workshop sector, was worse than the 50.0 reading in July, and the first time it showed contraction since February.

The index is seen as a key barometer of the Asian giant’s economic health, a key driver of global growth.

A figure above 50 signals expansion in the sector, while anything below indicates shrinkage.

It was the lowest official PMI since August 2012, but was still better than an independent survey sponsored by Chinese media group Caixin, announced late last month.

Its preliminary PMI reading for August plunged to a 77-month low of 47.1.

Caixin was due to release the final figure, compiled by financial information services provider Markit, later Monday.

The outlook for China’s economy has turned decidedly pessimistic even after gross domestic product (GDP) registered an expansion of 7.0 percent in the April-June quarter, surprising economists on the upside.

Indicators in the current third quarter have worsened as have concerns over the health of China’s economy, leading to turmoil on overseas stock markets as a bubble also deflates on domestic bourses.

China’s economy expanded 7.4 percent last year, its weakest since 1990, and GDP has slowed further this year.

Analysts have said that giant explosions last month in the port of Tianjin as well as a military parade set for Thursday in Beijing to commemorate the 70th anniversary of the end of World War II — for which factories have been closed and a public holiday declared — likely helped weaken manufacturing activity in August.