China Factory Activity Shrinks Less Than Expected

China’s official NBS Manufacturing PMI increased to 49.8 in August 2026 from 49.2 in the previous month, surpassing market expectations of 49.7. It was the second consecutive month of contraction in factory activity, amid persistently weak domestic and external demand and extreme weather conditions. Output returned to expansion (50.4 vs 49.9 in July), while new orders also expanded after contracting in the previous month (50.6 vs 48.5), with new export orders also returning to expansion (50.1 vs 49.6). However, employment remained subdued (48.7 vs 49.0), while purchasing activity returned to expansion (50.5 vs 49.4), and supplier delivery times shortened for the first time in seven months (50.1 vs 49.5). On the price front, input cost inflation accelerated to a three-month high (56.6 vs 53.2), while output prices rose after falling in the previous month (50.4 vs 47.8). Business sentiment weakened to its lowest level in five months (53.8 vs 54.1).





