(Yicai) Aug. 31 -- Activity in China’s manufacturing sector showed a slight improvement in August despite contracting for the second consecutive month, as the impact of extreme weather eases and policies to stabilize growth strengthen.

The manufacturing purchasing managers’ index came in at 49.8 this month, up from 49.2 the month before, according to data released by the National Bureau of Statistics today. A reading below 50 indicates contraction.

The new orders sub-index bounced back into expansion territory in August, up to 50.6 from 48.5 in July, with the new export orders index climbing to 50.1 from 49.6, NBS data also showed. The raw materials sub-index surged to 56.6 from 53.2, ending a four-month decline.

Domestic and international market demand for China’s manufacturing sector expanded in August, said Wen Tao, an expert at the China Logistics Information Center. The new orders and new export orders sub-indexes improved significantly compared with the same period last year and last month.

The changes in market demand on a month-to-month basis were better than a year earlier, indicating that strengthened policies have effectively enhanced the momentum for economic development, he added.

From the perspective of enterprises, market competition is a prominent issue, Wen noted. Surveys indicate that this month, the proportion of manufacturing companies reporting intensified industry competition exceeded 48 percent, up from 47.1 percent in July, marking the second consecutive month of increase.

The main reasons driving the accelerated increase in raw material prices are the expansion in supply and demand from enterprises, a rebound in purchasing activities, and improved policy expectations, according to Wen. Moreover, the escalating tensions in the Middle East have intensified fluctuations in commodities markets, such as crude oil.

China’s non-manufacturing PMI, which includes construction and services, remained unchanged from last month at 49 in August, according to the NBS data. This indicates that non-manufacturing sectors have maintained steady activity and relatively stable growth momentum, though their overall growth potential still requires further exploration.

Even though the operation of non-manufacturing sectors remains relatively stable, there are noticeable structural positive changes, such as increased activity in infrastructure projects, the continued impact of summer consumption, and a sustained burst of innovation-driven vitality, said Wu Wei, another CLIC expert.

The composite PMI output index, which combines the manufacturing PMI’s production sub-index and the non-manufacturing PMI, rose to 49.5 from 49.3 this month from July, showing an improvement in the country’s overall output and economic activity levels.

Editor: Futura Costaglione