China manufacturing activity slows down in August

Growth in China's manufacturing sector slightly moderated in August, pointing to subdued momentum in the economic recovery, new data showed Monday.

The purchasing managers' index (PMI) came in at 51.1 in August, down from July's 51.7, according to data released by the National Bureau of Statistics and the China Federation of Logistics and Purchasing.

A majority of sub-indices retreated in August, with those measuring production, new orders and purchasing volumes registering the biggest drops.

"The PMI data indicates some downward pressure on the economy," noted Zhang Liqun, an economist at the Development Research Center under the State Council.

In breakdown, the production index fell 1 percentage point from a month earlier to 53.2 percent, while the index for new orders slowed 1.1 percentage points to 52.5 after racing to the highest since May 2012 in July.

In a private survey, the final HSBC/Markit PMI retreated to 50.2 in August, roughly in line with a preliminary reading of 50.3 and only a shade above the 50-point mark that demarcates an expansion in activity from a contraction.

In the HSBC survey, demand appeared to have softened across the board in August.

"The economy still faces considerable downside risks to growth in the second half of the year, which warrants further policy easing," said Qu Hongbin, an economist at HSBC.

Lackluster final demand weighed on the labor market, which shrank the most in three months in August as companies fired workers or declined to fill job vacancies as to reduce costs.

The broad cool-down in activity caused production prices and final sales prices to fall, the survey showed, noting that a number of companies had cut spending on steel in particular.

Profit growth of China's listed companies also dropped from a year ago in the first half of this year as economic slowdown continued to weigh on business performance.

A total of 2,558 firms listed on the Shanghai and Shenzhen stock exchanges raked combined net profit of 1.27 trillion yuan ($205.9 billion) in the January-June period, up 9.47 percent year-on-year, the Shanghai Securities News reported on Monday.

The growth rate was still outpaced by that of the same period in 2013, when listed companies saw profits increase over 11 percent due to a low base in the previous year.