China – August PMIs suggest growth has lost steam

The official manufacturing PMI remained in contraction territory at 49.4 in August.

Tommy Wu

Commerzbank Economic Research

09/01/2025

The ongoing demand weakness has been exacerbated by companies holding back new orders amid the government’s “anti-involution” campaign to curb excessive and destructive competition. The private PMI survey results were more upbeat, however. Meanwhile, the official non-manufacturing PMI improved to 50.3, but the details suggest that the momentum in construction and consumption has lost steam. The government has rolled out some modest measures to support consumption. We think the government will dial up stimulus efforts later this year following a couple more months of weak data.

The official PMIs for August show that growth momentum in the Chinese economy continues to stagnate following the sharp slowdown in growth seen in July’s data .

Manufacturing momentum fell further

The manufacturing PMI stayed below the 50-neutral mark at 49.4 in August after 49.3 in July. The details from the PMI report showed that new orders remained in contraction, even though production expanded further to clear existing orders. In addition to the ongoing demand weakness, the contraction in new orders may have been exacerbated by companies holding back on making new orders and investment amid the government’s “anti-involution” campaign which is aimed at curbing excessive and destructive competition.

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