Chinese factory activity's Purchasing Managers' Index (PMI) slipped slightly in August to 51.0 from 51.1 in July due to widespread floods.
The PMI, a key gauge of manufacturing activity in China, was also below Bloomberg's expectations of a 51.2 climb for August.
The country's PMI bounced back after plummeting to 35.7 points in February due to coronavirus measures.
According to Zhao Qinghe, a senior statistician at the National Bureau of Statistics (NBS), heavy rains and floods affected businesses in Sichuan and southwestern China.
Nomura economists had warned earlier this month about resurgent flooding in mid-August that could impact both production and demand along the Yangtze River.
China posted a non-manufacturing PMI of 55.2 points, up from 54.2 in July and slightly better than what analysts predicted to be a flat level throughout the month.
Analysts, such as Julian Evans-Pritchard, senior China economist at Capital Economics, were very positive about the outlook.
According to Evans-Pritchard, since growth in the industry is back to its pre-virus level, it's not too surprising that the manufacturing PMI has started to level off.
With increasing fiscal support, Evans-Pritchard thinks there is some further upside to industrial activity.


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