China’s factory activity contracts in August despite extension of trade truce with US

China’s factory activity contracted in August, marking five consecutive months of decline, according to an official survey released Sunday, after a trade truce between the US and China was extended for another 90 days.

China’s purchasing managers index in the manufacturing sector rose from 49.3 in July to 49.4 in August, indicating the decline slowed from the previous month, the National Bureau of Statistics said. PMI is measured on a scale from 0 to 100, where 50 marks the cutoff between expansion and contraction.

The indices measuring manufacturing, new orders and raw material inventory edged up in the sector. But the index measuring employment saw a slight drop.

The survey results came weeks after US President Donald Trump extended a pause in sharp hikes in import duties for 90 days. But uncertainty over tariffs on exports to the US is still looming over the world’s second-largest economy.

This compounds the pressures on China’s economy, from a property sector downturn to a rise in the jobless rate, among other factors. China also has been enduring floods from torrential seasonal rains that have disrupted business activity in parts of the country.

But National Bureau of Statistics senior statistician Zhao Qinghe said the purchasing managers index in manufacturing, the non-manufacturing PMI and the overall PMI all saw growth in August — and that signalled the country’s overall economic sentiment continued to improve.

In a statement on Saturday, China’s Ministry of Commerce said its international trade representative Li Chenggang visited the US last week to talk with American officials on implementing the consensuses of their state leaders and trade talks between both sides, as well as economic and trade ties between the two countries.

Li stressed that China and the US should adhere to the principles of mutual respect, peaceful coexistence and win-win cooperation, managing differences and expanding cooperation through equal dialogue, the ministry said.

During his trip, he also met with business representatives, it added.