The purchasing managers' index (PMI) of China's manufacturing sector, a measure of business sentiment, fell in August to 50.6, the lowest the figure has been in 14 months, in what experts said is a slight downturn due to slowing exports.
The PMI report compiled monthly by domestic news site Caixin and research firm IHS Markit noted that slowing exports and worsening employment combined with inflationary pressure on input costs have led to a relative decline in business confidence in the manufacturing sector.
"Export orders have been declining for three months. With the China-US trade tensions, it is clear that external demand is weakening," Xu Gao, chief economist at China Everbright Securities Asset Management, told the Global Times on Monday.
Although slightly lower than July PMI, which was 50.8, the August PMI figure was still above 50, which indicates that economic activity in the sector is still expanding. Xu noted that China has a variety of means to encourage growth, such as policy adjustments to further tap its vast internal market.
"China has plenty of room for maneuver, as much of the downward pressure on the economy has been due to recently tight macroeconomic policy. China has already started to adjust financial and monetary policy for the second half of this year, and fiscal policy will also become more proactive," said Xu.
"China must increase its reliance on internal demand to drive stable economic growth," added Xu.
