Meanwhile, the rate of contraction in new export business eased from July. As a result of rising inflows of new work, purchasing activity and inventories expanded, while unfinished business increased. Business confidence also rose, but firms remained cautious with regards to staff hiring.

Turning to prices, average input costs rose at the fastest pace in nine months. At the same time, selling prices stabilised, which ended an eight-month streak of discounting.

The headline seasonally adjusted Purchasing Managers' Index (PMI) posted 50.5 in August, up from 49.5 in July. Rising above the 50.0 no-change threshold in August, the latest figure signalled that manufacturing sector conditions improved midway through the third quarter of the year. Although marginal, the rate of improvement was the quickest in five months.

Rising new orders supported a renewed expansion of manufacturing output in August. Stronger inflows of new orders also led to a renewed accumulation of backlogged work in August.

Purchasing activity increased for a second consecutive month amid higher new orders and production. Stocks of finished goods also accumulated midway through the third quarter.

Prices data showed that average input costs rose for a second successive month in August. Overall, sentiment regarding the one-year outlook for output in the Chinese manufacturing sector remained positive in August.

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