SHANGHAI — China’s purchasing managers’ index for August showed the country’s manufacturing sector expanding at its fastest rate in two years.
China’s official PMI, which mainly tracks large, state-owned enterprises, came in at 50.4 for the month of August, according to data released Thursday by China’s National Bureau of Statistics. A reading of above 50 indicates growth, while below 50 indicates contraction.
This represents the highest PMI since October 2014, following on from July’s reading of 49.9 and June’s PMI of 50.
A separate PMI survey from Markit/Caixin, which focuses on small and midsize firms, logged a reading of 50 for the month of August, below July’s 50.6.
While results of 50 and above for both surveys is a positive indicator for China’s economy, economists and analysts are urging caution.
In a note released prior to Thursday’s data, the Institute of International Finance warned China’s economy still faces significant challenges, and the need for major reforms remains.
“Beneath the generally calm surface, the underlying stresses in the economy continue to build, and will eventually need to be faced more squarely in order to forestall a more pronounced deterioration in economic performance,” said Charles Collyns, IIF’s chief economist and managing director. “Eventually a major policy overhaul will be needed — but this won’t happen until late next year, as the second half of the [Chinese president Xi Jinping] mandate begins, at the earliest.”