By Gina Lee
Investing.com – A private survey showed that Chinese factory activity expanded at the fastest rate in nearly a decade over the year’s first new export orders, with manufacturers raising production to meet the increased demand.
Chains said on Tuesday that the Caixin manufacturing Purchasing Managers’ Index (PMI) for August increased to 53.1, higher than July’s figure of 52.8 and the forecasted 52.6 prepared by Investing.com. The reading indicated a fourth consecutive month of growth and the biggest rate of expansion since January 2011.
The Chinese economy continues to make progress in the economic recovery from COVID-19, with the export orders a potential signal of a more durable and broad recovery ahead. The orders came on the back of countries loosening COVID-19 restrictions to kickstart their own economic recoveries
However, August’s manufacturing and non-manufacturing Purchasing Managers’ Indexes (PMIs), released on Monday, struck a note of caution. Monday’s data showed that factory activity grew at a slightly slower pace in August, attributable to flooding in parts of China over the summer, but the services sector was at its strongest level since 2018.
China’s labor market saw more companies hiring to meet the increased production needs, but unemployment remains a concern
“Employment remained an important focus. An expansion of employment relies on long-term improvement in the economy. Macroeconomic policy supports are essential, especially when there are still many uncertainties in domestic and overseas economies,” Caixin Insight Group senior economist Wang Zhe said in in a commentary accompanying the data release.
He added that employment was reaching a “turning point” as factories’ backlogs of work rose at a faster pace.
Meanwhile, Chinese factories’ business optimism towards the year ahead remained strong overall but saw a slight dip in August over fears of COVID-19's long-term severity.