A worker is busy with producing and packaging zippers at a zipper manufacturer in Yiwu, East China's Zhejiang Province, the country's manufacturing hub. Photo: Yang Hui/GT

China's official Purchasing Managers' Index (PMI) for the manufacturing industry recorded 51 in August, indicating the expansion of manufacturing activities at the fastest speed in two years as the sector recovers amid the COVID-19 crisis. 

The figure is down slightly from July's 51.1, but signals that the sector is stable, according to the National Bureau of Statistics (NBS). A reading above 50 indicates expansion, and a reading below 50 suggests contraction. 

"This continued recovery of the manufacturing sector is driven by incoming orders, trade policy support, and development of the high tech industry," Zhao Qinghe, a senior analyst from the NBS said. 

The new orders index in August recorded 52, up 0.3 percentage points from July, rising for the fourth month in a row. New orders indexes from the medical, metal and non-metal industries were all up by more than 4 percentage points on last month. 

Manufacturing PMI for small companies recorded 47.7, dropping 0.9 percentage points since July and putting it in the contraction region. More than half of the small companies surveyed report insufficient market demand and over 40 percent say there is a lack of capital.

According to Zhao, this year's serious flooding, which ravaged Southwest China's Chongqing Municipality in Sichuan Province, is hindering small company activities by slowing down raw material procurement and reducing orders. 

"Due to the seasonality of the flooding, the impacts are expected to subside in September, with activity picking up a little," Tian Yun, vice director of the Beijing Economic Operation Association, told The Global Times.

"But in general, smaller companies will recover more slowly, and will count more on a strong rebound in order numbers," Tian said. 

China's manufacturing sector was heavily battered in February, recording a record low 35.7 in PMI amid the economic shutdown caused by the COVID-19 outbreak. The figure recovered the following month and has remained in the expansion region for six months so far. 

Global Times