China's manufacturing activity contracts in August: Caixin

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China's manufacturing sector posted its first contraction in the past 16 months in August, as the resurgence in local COVID-19 cases hampered production and dampened demand, a private survey said on Wednesday.

The Caixin China General Manufacturing Purchasing Managers' Index, which gauges the sector's health, came in at 49.2 in August, dropping through the 50-mark that separates expansion from contraction for the first time since April 2020, media group Caixin said in a report on Wednesday.

The index was down from 50.3 in July, as the resurgence in local COVID-19 cases across several regions disrupted manufacturing activity, the report said.

"The latest COVID-19 resurgence has posed a severe challenge to the economic normalization that began in the second quarter of last year," said Wang Zhe, senior economist at Caixin Insight Group.

Supply and demand modestly weakened in the manufacturing sector, the job market maintained overall stability but weakened slightly, and raw material prices remained high last month. New export orders also fell amid logistics disruptions and the continued global pandemic, Wang said.

"Authorities need to take a holistic view and balance containing COVID-19, stabilizing the job market, and maintaining stability in supply and prices," he said.

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