(Yicai) Sept. 1 -- Activity in China’s manufacturing sector returned to expansion last month after falling into negative territory in July because of improved supplies, demand, and employment.

The Caixin manufacturing purchasing managers’ index came in at 51 in August, an increase of 1.8 point from the previous month, data released by financial media group Caixin showed today. A reading above 50 indicates expansion.

The data differs from the official manufacturing PMI, published yesterday by the National Bureau of Statistics, which logged a 0.4 point rise to 49.7. It is the fifth consecutive month that the NBS figure has stayed in negative territory.

The recovery in supply and demand led companies to implement expansion plans, which in turn spurred employment. The manufacturing employment sub-index bounced back into expansion territory for the first time in six months, soaring to the highest since April 2010.

China’s manufacturing procurement activities also returned to expansion territory last month, but the sub-index for raw material inventory fell below 50. Some manufacturers said they remained prudent about the inventory because the price of some raw materials was high, others said that they were not willing to increase the inventory because of weak sales.

Purchasing prices for raw materials such as metal soared in August, while manufacturers’ ability to negotiate prices was weak because of the fierce market competition. Last month’s ex-factory price index barely rose within the contraction territory.

While entrepreneurs in the manufacturing sector stayed optimistic about growth in the upcoming year, last month’s production and operations expectation index plunged to the lowest in 11 months. Some companies are worried about weakened domestic and overseas demand.

The pressure from the economic downturn brought in by insufficient domestic demand and uncertainties in overseas demand still call for attention, said Wang Zhe, a senior economist at Caixin Insight Group. Stabilizing expectations and increasing residents’ income remain the focus of policies, Wang added, noting that the internal and external economic environments are becoming more complex, and the urgency and necessity of issuing related supporting policies further increased.

Editor: Futura Costaglione