This photo taken on October 17, 2018, shows a worker inspecting shoes at a factory in Qingdao in China's eastern Shandong province.
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China's manufacturing activity expanded in August, according to the results of a private investigation published on Monday as production increased, but export sales fell amid the country's escalating trade war with the United States
Caixin / Markit factory Purchasing Managers & # 39; Index (PMI) was 50.4 in August ̵
PMI readings above 50 indicate expansion, while under signal signal contraction.
The new orders sub-index remained in an expanding territory in August, but hinted at July, which hinted at flat demand for manufactured products, said Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group, a Caixin subsidiary.
However, "the meter for new export orders remained in contraction and fell to its lowest level this year in August, reflecting declining foreign demand amid an intensifying trade dispute between China and the United States," Zhong said in a press release.
The two countries imposed new tariffs on each other's imports on Sunday.
Despite the improved headline PMI reading in August, partly due to improved production activity, the outlook is not rosy with long-term pressure down, said Zhong.
"Overall demand did not improve, and foreign demand fell especially, leading to an increase in inventories," he wrote. "There was no sign of improvement in the companies' willingness to replenish inventories of inputs or in their confidence. Industry prices pulled down."
The results of the private investigation came after official data showed the industry PMI dropped to 49.5 in August, China's National Statistics Bureau said on Saturday – that's compared to 49.7 in July. A Reuters poll showed that analysts expected the official PMI to remain unchanged from July.
The official PMI survey usually surveys a large proportion of large corporations and government companies. The Caixin indicator has a larger mix of SMEs.
PMI is a study of how companies view the operating environment. Such data provides a first glimpse of what happens in an economy, as they are usually among the first major economic indicators released each month.
China-PMI is closely monitored by global investors for signs of trouble amid a national economic slowdown and ongoing trade dispute between the United States and China.
– CNBC's Yen Nee Lee and Reuters contributed to this report.