(Yicai) Sep. 1 -- Activity in China's manufacturing sector showed a slight improvement in August despite contracting for the fifth month in a row, helped by easing weather disruptions and a government clampdown on cutthroat competition.

The manufacturing purchasing managers' index came in at 49.4 last month, up from 49.3 in July, according to data released by the National Bureau of Statistics yesterday. It was 49.7 in June, 49.5 in May, and 49 in April. A reading below 50 indicates contraction.

The PMI fell into contraction territory in April amid an escalation in China-US trade tensions.

Production increased for the fourth consecutive month in August, climbing to 50.8 from 50.5 the month before. “This shows that manufacturing production has picked up pace," said Zhao Qinghe, a senior NBS statistician.

The high temperatures and heavy rainfalls that weighed on production in July, sending the PMI to its lowest since April, eased last month, while the government’s campaign against ‘involution,’ or self-defeating hyper-competition that yields diminishing returns, was cranked up.

The campaign has affected market expectations and pushed up the prices of commodities such as coal and steel, Wang Qing, chief macroeconomic analyst at Golden Credit Rating International, told Yicai.

That is the main reason for the increases in raw material purchase prices and ex-factory prices, Wang said. They rose for the third month in a row, gaining to 53.3 and 49.1 from 51.5 and 48.3, respectively, per the NBS data.

China should significantly increase its counter-cyclical economic policy adjustments and boost investment in public goods and services after the PMI remained below the boom-bust line for the fifth consecutive month, said Zhang Liqun, a special analyst at the China Federation of Logistics and Purchasing.

A buildup of positive factors will drive improvements in the economy, said Wen Tao, an analyst at the China Logistics Information Center. He expects the economy to go on steadily recovering, with manufacturing demand stabilizing and showing signs of a rebound, production steadily expanding, raw material prices inching higher, and product prices stabilizing.

The non-manufacturing PMI, which includes the construction and services sectors, rose to 50.3 from 50.1 from July’s eight-month low of 50.1, the NBD data also showed.

The services PMI climbed to 50.5, the highest so far this year, from 50, while the construction PMI tumbled to 49.1 from 50.6, mainly affected by adverse factors like high temperatures and heavy rains.

The composite PMI output index, which combines the production sub-index of the manufacturing PMI and the non-manufacturing PMI, rose to 50.5 from 50.2, signaling an acceleration in production and business activity.

Editor: Futura Costaglione