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The
official purchasing managers' index (PMI) is expected to have
edged up to 49.4 in August, a marginal improvement on the 49.3
recorded in July, according to the median forecast of 34
economists in the poll.
An index reading above 50 indicates expansion in activity on a
monthly basis while below that signals contraction. Only two
respondents forecast readings of 50 or above.
The last time the indicator pointed to contraction for more than
three consecutive months was in the six months to October 2019,
before the pandemic, suggesting negative sentiment among factory
managers has become entrenched.
"Demand from key trading partners is diminishing. Both the U.S.
and Eurozone Manufacturing PMIs have fallen below the expansion
threshold of 50 for nine and 14 consecutive months,
respectively," Taimur Baig, chief economist at DBS, wrote in a
note. "ASEAN, China's top trading partner, has also decreased to
a nearly two-year low of 50.8."
Major banks have downgraded their economic growth forecasts for
the year to below the government's target of about 5% as
recovery sputters on a worsening property slump, weak consumer
spending and tumbling credit growth, prompting authorities to
slash interest and promise further support.
Over the weekend, China announced a halving in stock-trading
stamp duties and on Friday approved guidelines for affordable
housing to expand investment, although analysts anticipate home
prices will show no growth this year.
Most analysts say policymakers are unlikely to deliver any
aggressive stimulus amid worries about exacerbating debt risks.
The official manufacturing PMI, which largely focuses on big and
state-owned firms, and its survey for the services sector, will
be released on Thursday.
Last month, the services and construction sectors teetered on
the brink of contraction - the last remaining bright spots in an
economy otherwise struggling for signs of life.
(Reporting by Joe Cash; Polling by: Anant Chandak and Susobhan
Sarkar in Bengaluru. Editing by Sam Holmes)
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