China manufacturing activity Report Interpretation

Overview

This macro update reviews China’s August RatingDog manufacturing PMI. Goldman Sachs concludes that manufacturing activity became firmer, with improvement in output, orders and exports, while a widening gap between input and output prices continued to weigh on manufacturers’ margins.

Core views

The headline RatingDog China manufacturing PMI rose to 51.5 in August from 50.9 in July, above Goldman Sachs’ forecast of 50.6 and Bloomberg consensus of 51.0. Goldman Sachs interprets the rise, together with an increase in the NBS manufacturing PMI, as evidence that manufacturing activity was firmer in August. The improvement was led by production and demand. The output sub-index rose to 53.1 from 51.5, the largest increase among the major components, while the new-orders sub-index increased to 52.0 from 50.9. Surveyed firms attributed stronger orders to improved market conditions, firmer client demand, new clients, robust export growth and business development. External demand also strengthened: the new-export-orders sub-index rose to 52.2 from 50.2. Inventory indicators increased as well. Raw-material inventories rose to 51.4 from 50.7, and finished-goods inventories increased to 51.3 from 49.7. The employment sub-index, however, fell to 50.0 from 50.6. Suppliers’ delivery times edged up to 49.8 from 49.6. The report highlights a less favorable pricing backdrop for profits. Input prices increased to 52.2 from 51.7, with S&P Global commentary linking higher costs particularly to metals and oil. In contrast, the output-prices sub-index declined to 49.6 from 50.1. Manufacturers cut output prices for the first time in 2026 despite higher input costs, citing intense competition and promotional activity. Goldman Sachs notes that input-price indices increased in both the NBS and RatingDog surveys and remained well above output-price indices, pointing to continued pressure on manufacturing profit margins.

Analysis framework

Goldman Sachs compares August’s headline PMI and key sub-indices with July readings and with its forecast and Bloomberg consensus. It then uses output, orders, export orders, inventories, employment and price components, alongside the NBS PMI, to assess activity momentum and the gap between cost inflation and selling prices.

Methodology notes

• Industry AnalysisSupply-demand framework

  PMI component analysis of output, orders, exports, inventories and prices

  The report uses survey sub-indices to assess manufacturing demand and production momentum, then compares input and output price measures to identify cost and margin pressure.

Key data

• RatingDog China manufacturing PMI51.5 in AugustUp from 50.9 in July; Goldman Sachs forecast was 50.6 and Bloomberg consensus was 51.0.
• New-orders sub-index52.0Up from 50.9 in July.
• Output sub-index53.1Up from 51.5 in July; the largest rise among major sub-indices.
• New-export-orders sub-index52.2Up from 50.2 in July.
• Input-prices sub-index52.2Up from 51.7 in July.
• Output-prices sub-index49.6Down from 50.1 in July.

Impact & implications

The report views the concurrent rise in the NBS and RatingDog PMIs as a sign of firmer manufacturing activity. However, rising input costs alongside falling output prices suggest that improved activity has not removed pressure on manufacturers’ profit margins.

Risks

• Continued input-cost increases, particularly in raw materials such as metals and oil, could sustain pressure on manufacturers’ margins.
• Intense market competition and promotional activity are contributing to lower output prices despite higher input costs.