Chinese factory growth quickens in August as export orders surge
Its PMI rose to a two-month high of 51.5.
Manufacturing business conditions in China improved at a stronger rate in August, with output, new orders and exports all expanding more quickly than the month before, the latest RatingDog China General Manufacturing PMI showed.
The headline seasonally adjusted index rose to a two-month high of 51.5 in August, up from 50.9 in July, marking the ninth consecutive month above the 50.0 no-change threshold. The current upturn is the longest in five years.
Four of the index's five components made a positive contribution, the exception being employment, which was neutral.
New orders rose for a fifteenth consecutive month, the longest run of growth since 2018. Manufacturers linked the rise to improving market conditions, stronger client demand, new customers and business development, with growth given a lift by the fastest increase in new export business in six months.
The stronger flow of new work fed through into faster output growth, with production rising for a ninth straight month at the quickest pace since May.
Growth of orders and backlogs led to a build-up of outstanding work, which rose for a seventh consecutive month at its fastest pace since March. Stronger output also pushed finished goods inventories up by the most since September 2025.
Despite the rise in new orders and backlogs, manufacturers left staffing levels unchanged in August after two months of increases. Consumer goods producers continued to add workers, but this was offset by headcount reductions amongst intermediate and investment goods firms.
Firmer demand led manufacturers to raise input buying in August, having cut back in July, extending a build-up of purchased stocks to nine months — the longest such sequence since 2006-07. Suppliers' delivery times were little changed from July.
Cost pressures rose in August, with input price inflation accelerating for the first time since April, though the rate stayed moderate; firms pointed to higher raw material costs, particularly metals and oil. Even so, manufacturers cut their own selling prices for the first time in 2026, citing intense market competition and promotional activity, though the reduction was only marginal.
Business confidence in the 12-month outlook remained positive, underpinned by expectations of stronger demand, new product launches and capacity expansion, though overall sentiment softened to its weakest level since January.
Yao Yu, founder of RatingDog, said the headline index had risen to a two-month high, with new orders extending their longest growth run since 2018 and new export business increasing at its fastest pace in six months, driven by strength in consumer goods.
Yao added that manufacturing output had expanded for a ninth successive month at a three-month-high rate, whilst the first cut to output prices in 2026 reflected ongoing competitive pressure even as demand, output and exports all accelerated.
