China manufacturing PMI slipped to 49.7 in August

The official August manufacturing PMI of China slipped below 50 for the first time in six months. It fell to 49.7 which was within expectations vs 50.0 in July. The final reading for the private sector Caixin/Markit manufacturing PMI for August was revised up slightly to 47.3 from the preliminary reading of 47.1, notes Commerzbank. 

The details of both the official and private sector PMIs are worrying and point to continued manufacturing weakness eg the Caixin new orders component fell to the lowest level since March 2014. As a general rule, the official PMI is skewed to the larger enterprises and state-owned enterprises while the private sector Caixin PMI is biased to the small and medium size companies. 

In the official PMI, the breakdown by enterprises showed the component for small enterprise slipping to 46.9 from 47.9. For large enterprises, it held around 50.6 from 50.7 previously. The employment component in the official PMI will be an important sub-component to watch. It eased to 48.0 from 48.1 previously and a further deterioration will raise concerns and could signal further policy responses. USD-CNY is trading slightly weaker this morning at the 6.37 area after the daily fix was set lower by 0.2% to 6.3752, adds Commerzbank. This followed the lower close yesterday at 6.3723.