China's high-frequency indicators remained weak in August, with policy support potentially concentrated in September and October

Overview

Based on the EPMI and several high-frequency activity indicators, the report concludes that China's economy may continue to slow in August after weakening in July. In light of these signals, Nomura lowers its third-quarter growth forecast and expects policy support to accelerate in September and October, although the main economic impact may not become evident until the fourth quarter.

Core views

China's Emerging Industries Purchasing Managers' Index (EPMI) remained at 47.8 in August, unchanged from July. Because the index is not seasonally adjusted, the report further compares the monthly change with historical seasonal patterns: from 2023 to 2025, the EPMI rose by an average of 1.6 points from July to August, whereas it did not rebound in August 2026, meaning the actual performance was weaker than the usual seasonal pattern. Given the sluggish EPMI and still-weak policy support, Nomura expects the official manufacturing PMI to remain at 49.2 in August, unchanged from July, indicating that manufacturing activity may remain subdued. Other high-frequency data also suggest that the economic slowdown may continue in August. Year-on-year growth in passenger vehicle retail sales was -22.0% from August 1 to 16, weaker than July's -21.0%; year-on-year growth in the floor area of new home transactions across 20 major cities fell from 2.8% in July to -3.1% from August 1 to 19, indicating renewed weakness in real estate demand; year-on-year growth in weekly container throughput fell from 1.3% in July to -3.8% from August 1 to 16, a change the report views as an adverse signal for the export outlook. The simultaneous weakening of automobile, housing, and foreign-trade transportation indicators shows that the softness reflected in the EPMI is not merely an isolated survey-indicator phenomenon. Given the further deterioration in July's growth slowdown and the high likelihood that August's high-frequency data will remain weak, Nomura recently lowered its forecast for year-on-year real GDP growth in the third quarter from 4.5% to 4.3%, below market consensus. The downgrade is not based on a single data point; rather, it reflects the collective weakening of survey indicators, consumption-related activity, real estate transactions, and export-related logistics indicators, suggesting that third-quarter growth faces broad-based pressure. On policy, the report believes that current support remains weak, but based on the policy cadence of recent years, Beijing may announce more specific measures in September and October. Because there is a lag between policy introduction and its impact on the real economy, the report expects most of the effects to become evident in the fourth quarter. This means that near-term growth data may remain under pressure, while whether conditions improve in the fourth quarter will depend on the specific content, rollout speed, and transmission effectiveness of the policy measures.

Analysis framework

The report first examines the August EPMI and, because the indicator is not seasonally adjusted, compares its change from July to August with the pattern over the same period from 2023 to 2025. It then uses high-frequency data such as passenger vehicle retail sales, new home transaction area, and container throughput for cross-validation. After confirming simultaneous weakness across multiple areas, it lowers its forecast for third-quarter real GDP growth. Finally, based on the policy cadence of recent years, it assesses the timing of policy introduction and the lagged impact on the fourth quarter.

Methodology notes

• (Out-of-vocabulary methodology)

  Cross-validation using high-frequency indicators and seasonal patterns

  The report notes that the EPMI is not seasonally adjusted, so rather than looking only at the absolute reading of 47.8, it compares the change from July to August with the average increase of 1.6 points over the same period from 2023 to 2025. It also uses automobile retail sales, housing transactions, and container throughput to verify whether the economic slowdown is broad-based and adjusts its GDP forecast accordingly.

Key data

• August EPMI47.8Unchanged from July; the indicator is not seasonally adjusted and performed more weakly than the historical seasonal pattern.
• Seasonal change in EPMI from 2023 to 2025Average increase of 1.6 points from July to AugustUsed to show that the unchanged reading in August 2026 was weaker than the usual seasonal performance.
• Forecast for August official manufacturing PMI49.2Nomura's forecast, unchanged from July.
• Year-on-year growth in passenger vehicle retail sales-22.0%From August 1 to 16, 2026, weaker than July's -21.0%.
• Year-on-year growth in new home transaction area across 20 major cities-3.1%From August 1 to 19, 2026, below July's 2.8%.
• Year-on-year growth in weekly container throughput-3.8%From August 1 to 16, 2026, below July's 1.3%; the report considers this unfavorable for the export outlook.
• Forecast for year-on-year real GDP growth in the third quarter4.3%Lowered from 4.5% and below market consensus.
• Expected period of policy accelerationSeptember to October 2026The report expects more specific policy measures to be introduced during this period, with their main impact becoming evident in the fourth quarter.

Impact & implications

The report believes that the simultaneous weakening of several high-frequency indicators supports third-quarter economic growth falling below the previous forecast and raises the likelihood that the official manufacturing PMI will remain subdued in August. Even if policies are rolled out more rapidly in September and October, their main effects are not expected to become evident until the fourth quarter. Near-term growth pressure and the lag in policy transmission are therefore central to the macroeconomic assessment.

Risks

• The economic growth slowdown that emerged in July may continue into August and cause third-quarter real GDP growth to fall below previous expectations.
• Year-on-year growth in container throughput has turned negative, posing an adverse signal for the export outlook.
• Current policy support remains weak and may be insufficient in the near term to offset the simultaneous weakening of automobile, real estate, and foreign-trade-related activity.

What to watch

• Monitor whether the official manufacturing PMI for August matches Nomura's forecast of 49.2 and whether it remains subdued.
• Monitor whether more specific policy measures are introduced in September and October, as well as their content and implementation speed.
• Monitor whether the effects of the policies become evident in the fourth quarter as the report expects.
• Monitor whether year-on-year real GDP growth in the third quarter approaches Nomura's revised forecast of 4.3%.