PMI显示上游行业出现温和再通胀

China Economy PMI shows mild reflation in upstream sectors Frank Liu(852) 3761 8957frankliu@cmbi.com.hk China’smanufacturing PMI edged higher in August,underpinned byimprovements in both production and demand.Rebounding raw material priceand ex-factory price indexes pointed to a mild price reflation in upstream sectorsthanks to the anti-involution campaign.Non-manufacturingPMIinched up asserviceimproved while construction extended its weakness.Reflated rawmaterial prices may point to a mild recovery in PPI, which serves as a constructiveleading indicator for a rebound in corporate profits.China’s economic growth mayface furtherslowdown pressure in4Q25. However,theweak data might beagood news asit would increase the possibility of demand-side stimulus andsupply-side capacity reduction.We expectanother10bps LPRand 50 bpscutin4Q25. Policy may also strengthen transferpayments to low-and middle-incomehouseholds, the social securitysystemand multi-child families to more effectivelyboost household consumption. Bingnan YE, Ph.D(852) 3761 8967frankliu@cmbi.com.hk Manufacturing PMIremained in contraction while price level rebounded.Manufacturing PMIedgedupto49.4% from49.3% inAug,abovemarketexpectationsof 49.1%.Productionrosefrom50.5% to 50.8% inAug. Neworder index inched up to 49.5% from 49.3% astheexport order edged up butremained in contraction at 47.2%.Anti-involution policy continued to supportmild reflation in upstreammaterial cost as raw materialpurchase price indexfurther expanded to 53.3% from 51.5%, while ex-factory price edged up to49.1%in Aug.Corporates procurement moderately recovered whileemployment further contracted.Breaking down by sector,pharmaceuticalsand computer& electronicequipmentsawrobust performancein both neworders and production,while textiles& apparel, furniture,and chemicalproductssaw notable declines. Non-manufacturing PMIpicked up amid recovering service sector.Non-manufacturing PMIServicePMI edged upto 50.3% inAugfrom 50.1%.Service PMIaccelerated to 50.5% from 50%, asbusiness activity expectationsexpandedwhilethenew order, sales price, andemploymentindexesedgeddown. Breaking down by sector, activities inrail, water &air transportation,telecom, broadcasting & TVandfinancial marketservices remained in highprosperity; whileretail and real estatecontracted. Construction PMI dipped to49.1% inAugfrom50.6%, asnew order index fellfrom42.6%to40.6%,indicating prolonged weakness in infrastructure investment in 2025. Source: NBS, CMBIGM Reboundingraw material prices may point to a mildreflation.The anti-involution campaign has driven the raw material price in major upstreamindustries includinglithium battery,photovoltaic equipment and cement,although the prices of downstream end-products remained depresseddue toweak demand.The mild recovery in PPI serves as a constructive leadingindicator for a rebound in corporate profits,eventhough the sustainability ofthis recovery remains the keyfactor to monitor.China’s economic growth mayface further slowdown pressure in 4Q25 due to the softeningof propertymarket, payback effect of export frontloading and fading impact of trade-inprogram. However,theweak data might beagood news as it would increasethe possibility of demand-side stimulus and supply-side capacity reduction.We expectanother10 bps LPR and 50 bps cutin4Q25, along with a possiblemoderateincrease in the broad fiscal deficit. Policy may also strengthentransferpaymentsto low-and middle-income households, the social securitysystemand multi-child families to more effectively boost householdconsumption. Source:Wind, CMBIGM Source:Wind, CMBIGM Source:Wind, CMBIGM Source:Wind, CMBIGM Source:Wind,CMBIGM Source:Wind, CMBIGM Source:Wind, CMBIGM Source:Wind, CMBIGM Source:Wind, CMBIGM Source:Wind, CMBIGM Source:Wind, CMBIGM Source:Wind, CMBIGM Source:Wind, CMBIGM Source:Wind, CMBIGM Disclosures& Disclaimers Analyst CertificationThe research analyst who is primary responsible for the content of this research report, in whole or in part, certifies thatwith respect to the securities or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about the subject securities or issuer; and (2)no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific views expressed by that analyst in this report.Besides, the analyst confirms that neither the analyst nor his/her associates (as defined in the code of conduct issued by The HongKong Securities and Futures Commission) (1) have dealt in or traded in the stock(s) covered in this research report within 30 calendar days prior to the date of issue of this report; (2) willdeal in or trade in the stock(s) covered in this research report 3 business days after the date of issue of this report; (3)serve as an officer of any of the HongKong listed companies covered in this report; and (4) have any financial interests in the Hong Kong listed com