China's new orders and its factory-gate prices both crossed back above 50 in August, the headline manufacturing index did not, and the employment readings kept falling

The index that gets quoted stayed under 50. The two inside it that turned are the ones worth the time this month.

China's manufacturing purchasing managers index came in at 49.8 for August, up 0.6 points on July, according to the National Bureau of Statistics. That is the second month running below the 50 mark that separates expansion from contraction, and the last reading above it was 50.3 in June.

Underneath, new orders rose 2.1 points to 50.6. New export orders rose to 50.1. Ex-factory prices rose 2.6 points to 50.4, which is the first time that series has been above 50 since May.

Prices moved at both ends, and not by the same amount

The purchase price index for main raw materials rose 3.4 points to 56.6, its highest since May. Factory-gate prices rose 2.6 points to 50.4. Costs are therefore running ahead of what firms are charging by a wider margin than they were in July, which is a different thing from prices recovering.

The same pattern shows on the services side. Non-manufacturing input prices rose 1.4 points to 51.1 while sales prices rose 1.4 points to 49.3 and stayed below the line.

Employment did not improve anywhere it was already weak

Manufacturing employment fell 0.3 points to 48.7. Services employment fell 0.4 points to 45.8. The non-manufacturing employment index was unchanged at 45.4. Across the thirteen months of history the release prints, its best reading is 46.1.

Construction was the exception and only in part. Its employment index rose 2.1 points to 43.0 and its new orders rose 2.3 points to 42.4, both from a very low base, while its headline business activity reading slipped a tenth to 46.9.

The rest of the picture

Production rose to 50.4. Raw materials inventories fell to 48.1. Imports rose to 48.6 and stayed below the threshold. The backlog of orders rose to 46.7.

Size still separates the field. Large enterprises came in at 50.6, up 1.1 points and above the line. Medium enterprises fell 0.3 to 49.4 and small enterprises rose 0.5 to 47.9, both below it.

Non-manufacturing business activity was flat at 49.0, with services at 49.3, also flat. The bureau names postal services, telecommunications and satellite transmission, and internet software and information technology services as running above 55.0, and wholesale, retail and capital market services as running below 50. Expectations for future business activity slipped 0.4 points to 55.0.

Put the two halves together and the composite output index is 49.5, up 0.2 on July, and still short of the line.

This is a diffusion index. A reading of 50.6 for new orders means more of the 3,200 sampled manufacturers reported orders up than reported them down. It does not say by how much.