China's manufacturing activity expanded for the 13th consecutive month in August, official data showed Thursday.
The country's manufacturing purchasing managers' index (PMI) came in at 51.7 in August, up from 51.4 in July and notably higher than the market expectation of 51.3, according to the National Bureau of Statistics (NBS).
A reading above 50 indicates expansion.
"The reading, the second highest so far this year, showed a steady upward trend of China's manufacturing sector," said NBS senior statistician Zhao Qinghe.
Zhao attributed the expansion to improving domestic demand and booming manufacturing in consumer goods and high-tech sectors.
Sub-indices for production and new orders came in at 54.1 and 53.1, respectively, up from 53.5 and 52.8 last month, suggesting an improved supply and demand relationship, Zhao said.
The import sub-index rose from 51.1 in July to 51.4 in August, the highest so far this year.
Equipment manufacturing reported a PMI figure of 52.8, higher than the headline manufacturing index of 51.7, indicating a better manufacturing structure.
The PMI sub-index for large-size companies continues to expand, rising for a third month, to 52.8 in August.
"The August PMI indicates a resilient manufacturing sector and the economy at large and that on-going supply-side structuring reform has strengthened the competitiveness of manufacturing companies," a Guotai Junan Securities report said.
China's economy expanded 6.9 percent in the first half, well above the target of around 6.5 percent for the year.
Rather than adopting large-scale stimulus, China has been pushing entrepreneurship and innovation to fuel the real economy, and prompting steady growth by restructuring.
The structure of the industrial sector has been optimized with progress made in eliminating outdated capacity, and high-tech industries growing faster than traditional industries.
Thursday's data also showed that China's non-manufacturing sector expanded at a slower pace in August, with the non-manufacturing business activity index standing at 53.4 in August, down from 54.5 in July.
"Though at a slower pace, the performance of China's non-manufacturing sector continues to maintain robust momentum," Zhao Qinghe said.
Zhao said slower expansion was the result of rainstorms and floods, in certain regions, affecting the construction industry.
The service sector, which accounted for more than half of the country's gross domestic product last year, saw slower expansion in August, with the index standing at 52.6, down from 53.1 in July.
New business orders came in at 50.3 in August, up from 50.2 in July, and staying above 50 for the fourth straight month.
The index for the construction industry, which was affected by extreme weather, dropped from 62.5 in July to 58 in August.
With the sub-indices showing strength in manufacturing, analysts are getting more bullish on the overall economic outlook.
August PMI data indicates resilient domestic demand and production growth may pick up in September, according to a China International Capital Corporation report.
"In the medium-to-long term, we expect overall investment demand to be sustained and the profitability of industrial enterprises to be on the mend, considering the continued manufacturing upgrade and the so-far cautious capacity expansion in the secondary industry," the report said.
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