1st LD-Writethru: China Caixin manufacturing PMI drops to 50 in August

The Caixin General China Manufacturing Purchasing Managers' Index (PMI), an indicator of manufacturing activity, dropped to 50 in August from 50.6 in July, a survey showed Thursday.

The 50-point reading for August is the neutral level, signalling a marginal deterioration in the manufacturing sector from expansion in July, according to the survey conducted by financial information service provider Markit and sponsored by Caixin Media.

The PMI is based on indicators including production, new orders, employment and raw material inventories. A reading above 50 indicates expansion, while a reading below 50 represents contraction.

In August, production and total new orders both rose at slower rates, while export sales continued to decline, according to Caixin.

Meanwhile job losses continued, though the latest reduction was the lowest in 2016 to date. This in turn contributed to a further rise in work backlogs, it said.

Inflationary pressures eased, with both input costs and prices charged increasing at weaker rates than seen in July, the survey showed.

The data came on the heels of the official PMI, which showed manufacturing activity rising slightly in August.

The official PMI came in at 50.4 in August, rising from 49.9 in July and beating the market expectation of 49.8, according to the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing.

Sample differences and uneven regional performances may explain the divergence between private and official manufacturing data, according to a report by China International Capital.

The official PMI covers a sample of 3,000 manufacturing enterprises, while Caixin covers only 500 industrial companies and is relatively volatile due to its small sample size and focus on eastern coastal areas.

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