On September 2, 2024, the Chinese economy became the focus of market attention, and the Caixin Manufacturing PMI attracted the attention of investors. The Caixin Manufacturing PMI rose from 49.8 in July to 50.4 in August.

August survey highlights

New orders rebounded, boosting production in the middle of the third quarter of 2024. Manufacturers said that improved underlying demand conditions and promotional activities drove the growth of new orders. However, export orders remained sluggish, falling for the first time in 2024, reflecting weak external demand conditions.

The growth of domestic demand provided necessary support to the labor market, ending an 11-month decline in employee levels. Due to the decline in commodity prices, average input costs fell for the first time in five months, and manufacturers lowered their selling prices to further stimulate demand, bringing market optimism to the highest level in three months, indicating increased confidence.

In contrast, the National Bureau of Statistics (NBS) PMI data showed that the NBS Manufacturing PMI fell from 49.4 in July to 49.1 in August. Despite the weak data, market risk sentiment was largely unaffected, and economists expected a rebound in September.

August Survey Summary

The upward trend in the Caixin Manufacturing PMI is a positive sign for the Chinese economy, indicating strong domestic demand. However, the August survey also highlights weak global demand, which may affect the trend of China's manufacturing output at the end of the year.

Market Reaction to the Caixin Manufacturing PMI

Despite the better-than-expected PMI data, the Hang Seng Index fell 1.31%. The PMI data failed to provide support to the market, and the Hang Seng Index was already trending downward before the PMI was released.

The Australian dollar also showed weakness on Monday. AUD/USD fell to an early Monday low of 0.67617 before the Caixin Manufacturing PMI survey, and then rose to a high of 0.67785. But after the PMI survey was released, AUD/USD rose to a post-release high of 0.67732 before falling back to a low of 0.67672.

Experts' views on the Chinese economy

Wang Zhe, senior economist at Caixin Insight Group, commented: "Recently released industrial production, consumption and investment data show that although the economy continues to maintain a stable trend in the second quarter, it is significantly lower than market expectations. Considering the ambitious annual economic growth target set by the government, the challenges and difficulties faced in stabilizing growth in the coming months will be severe."

Observation agency CN Wire commented: "Steel market demand is expected to pick up in September. As the impact of high temperatures and heavy rains in various places gradually subsides, the steel industry is approaching the traditional peak season, providing a solid foundation for the recovery of downstream demand."