China's manufacturing rose slightly in August according to tw0 PMI (purchasing managers' index data) surveys. Meanwhile output fell in India, South Korea and Indonesia

The HSBC/Markit purchasing managers' index (PMI), a private measure reflecting China’s smaller companies, rose to 50.1 for August, showing that the sector expanded slightly after a contraction in July. The Official PMI survey taht was issued on Sunday and is believed to mainly reflect activities in large-state-owned enterprises, expanded at its fastest pace in 16 months in August to 51, from 50.3 in July.

After adjusting for seasonal factors, the HSBC PMI - - a composite indicator designed to provide a single-figure snapshot of operating conditions in the manufacturing economy - - posted at 50.1 in August, signalling that operating conditions were relatively unchanged from the previous month. This was up from an 11-month low of 47.7 in July, and ended a three-month period of deterioration.

Chinese manufacturers signalled the first expansion of output in three months in August amid signs of improved market conditions. That said, the rate of growth was only slight. Behind the expansion of output, total new orders also increased, albeit marginally, and for the first time since April. Meanwhile, new export orders declined for the fifth consecutive month, and at a slightly quicker pace than that recorded in July. Weak client demand in Europe and the US was said to be behind the latest reduction in new business from abroad.

Higher volumes of new work led to the fastest accumulation of work-in-hand (but not yet completed) in two years. Furthermore, nearly one-in-ten respondents noted an increased amount of outstanding business.

Employment levels meanwhile decreased for the fifth successive month in August. However, the rate of job shedding was the weakest in four months, and only marginal.

Average input costs increased for the first time since February. The rate of input price inflation was only modest, however, and slower than the series average.

Inflation was generally attributed to higher raw material prices.

Manufacturers only partially passed on their increased costs to clients, raising their output charges marginally in August. Nonetheless, it was the first time in six months that average tariffs had been raised.

Purchasing activity rose for the first time since April, and at a modest pace. According to anecdotal evidence, input buying increased as a result of higher production requirements, which stemmed from new order growth.

Stocks of purchases meanwhile declined for the seventh month in a row and at a moderate pace. Finally, stocks of post-production goods fell for the second month in a row, albeit only slightly. Stronger than expected sales were said to have depleted stocks in the latest survey period.

Hongbin Qu, chief economist, China & co-head of Asian Economic Research at HSBC said: “The final reading of August’s HSBC China Manufacturing PMI recovered to 50.1, from an 11- month low of 47.7 in July. This implies that growth in China's manufacturing sector has started to stabilise on the back of a modest rebound of new orders and output. This was mainly driven by the initial filtering through of recent stimulus measures and companies’ restocking activities. We expect some upside surprises to China's growth in the coming months.”

India: Business conditions in the Indian manufacturing sector deteriorated during August for the first time in over four years, with both output and new orders falling at faster rates. Export orders also declined, ending an 11-month sequence of growth.

The seasonally adjusted HSBC India Manufacturing PMI fell from 50.1 to 48.5 in August, indicating a moderate deterioration of business conditions. The latest index reading was the lowest in four-and-a-half years and the first sub-50.0 reading since March 2009.

Amid reports of fragile economic conditions and subdued client demand, new orders placed at Indian manufacturers fell solidly in August. Furthermore, the rate of contraction accelerated to the fastest since February 2009. Order book volumes across the intermediate goods sector decreased at a sharp and accelerated pace, while consumer goods producers registered a slight decline.

New business from abroad also fell, ending an 11- month sequence of growth. Anecdotal evidence suggested that competitive pressures increased and that demand from key export clients was weaker.

Consequently, Indian manufacturers reduced their production volumes for the fourth consecutive month in August and at the fastest rate in four-and-a-half years. Output fell at both investment and intermediate goods firms, with the latter recording the sharper decline. Correspondingly, stocks of finished goods decreased for the first time since March, albeit moderately.

South Korea: The HSBC South Korea PMI indicated a deterioration in business conditions for the third successive month in August. The index rose marginally from 47.2 in July to 47.5, mainly reflecting weaker falls in output and new orders. In contrast, other measures indicated an acceleration in the rate of decline. Pre-production inventories shrunk at the fastest rate recorded since the global financial crisis in September 2008, whilst new export orders contracted at the sharpest pace recorded in 54 months.

Both manufacturing output and new orders fell for the third consecutive month, though their rates of decline slowed marginally. Panellists attributed the fall in production to lower order volumes, which some linked to a domestic economic slowdown and weak demand.

Contractions in shipbuilding and the construction industry also emerged from the survey as key factors behind August’s diminished production.

Outstanding business fell at the fastest pace recorded since the survey began in April 2004. August marked the fourth month of decline, and one-fifth of all respondents reported lower levels of business outstanding. Respondents primarily blamed a general economic slowdown. Anecdotal evidence also suggested that falling order volumes and a contraction in the IT industry were key drivers of the record reduction in backlogs.

Employment fell for the third consecutive month, though the rate of decline eased marginally in August. Lower output levels were commonly cited by respondents

Indonesia: August data highlighted an overall deterioration in the Indonesian manufacturing sector, as output, new orders and export business all contracted. Similarly, payroll numbers fell and at the fastest rate in the survey history.

At 48.5 in August, down from 50.7 in the previous month, the headline HSBC Purchasing Managers’ Index™ (PMI™) fell to a 15-month low and indicated a deterioration of business conditions across Indonesia. The downward movement reflected negative contributions from four of its five sub-indices, the exception being delivery times.

New export business contracted for the third month running in August, whereas the decline in total new orders was the first recorded since May 2012. Order book volumes fell solidly and at a rate that was the strongest since April 2011. Indonesian manufacturers suggested that both foreign and domestic demand was weaker.

Subsequently, companies reduced their production levels in August for the first time since January. The rate of contraction was, however, moderate. Input buying also fell during the latest month, ending a six-month period of growth. Purchasing activity contracted at a solid pace and one that was the fastest in the survey history. Monitored firms indicating a lower quantity of purchases generally commented that this reflected lower volumes of incoming new work.

With both output and input buying contracting, stock holdings across the Indonesian manufacturing sector were depleted in August. Pre-production inventories fell solidly and at the fastest pace since April 2011.

Holdings of finished goods also decreased at a solid pace and one that was the most marked in 21 months.

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