Official manufacturing PMI inched up to 49.4 in August, staying below 50 for five straight months. Export growth likely edged down due to fading front-loading effect and emerging tariff impact. Base effects likely dragged CPI into negative territory; PPI deflation may have eased significantly. Monthly retail sales and FAI growth may have rebounded moderately from the plunge in July, Standard Chartered's economists report.

Real activity likely remained steady

"China’s official manufacturing PMI improved 0.1pts to 49.4 in August, but stayed in contractionary territory for five straight months as demand softened further.  New orders and new export orders rose a mere 0.1pt each to 49.5 and 47.2, respectively. Meanwhile, the production PMI edged up 0.3pts to 50.8. Consumer goods manufacturing underperformed, while hi-tech manufacturing outperformed."

"Export growth likely edged down in August due to the impact of US’s global reciprocal tariffs, an unfavourable base and fading front-loading activity. The 2Y CAGR for industrial production (IP) likely eased as well, although headline growth may have remained solid. Meanwhile, import growth may have accelerated, partly thanks to a low base and higher commodity prices. As a result, the monthly trade surplus likely narrowed to c.USD 90bn."

"We expect retail sales growth to have rebounded after the slump in July, as the consumption subsidy quota was refilled. Monthly fixed asset investment (FAI) growth likely recovered to positive territory after falling in the prior month on our estimate, while YTD growth may have stayed flat. CPI likely turned negative (-0.3% y/y) mainly due to a high base. Food CPI deflation may have intensified to over 4.5% y/y. Meanwhile, PPI deflation likely eased significantly, thanks to a low base."