The better-than-expected manufacturing PMI print offers some relief after July's steep fall, and the beat against consensus should support a modest improvement in risk sentiment toward Chinese assets and commodity-linked currencies, even though the index remains below the 50 line separating growth from contraction. The stalled non-manufacturing PMI, unchanged at 49.0, tempers the positive read from manufacturing, since it confirms services and construction activity are not yet showing the same signs of stabilisation, consistent with recent data showing consumer spending and urban investment losing momentum. Markets will likely parse the composite PMI's modest improvement to 49.5 as evidence the broader economy is contracting at a slower pace rather than turning a corner, keeping pressure on Beijing to deliver the fiscal and monetary support policymakers have flagged, even as economists caution any such support is likely to be limited in scale. With exports remaining one of the few areas of resilience, attention will also turn to whether the AI infrastructure-driven demand for Chinese tech goods can continue offsetting weak domestic consumption in the months ahead.---China's factories are still shrinking, just by less than economists feared, leaving Beijing under continued pressure to prop up a slowing economy.Summary:China's official manufacturing PMI rose to 49.8 in August from 49.2 in July, beating a Reuters poll consensus of 49.6 but remaining below the 50-point expansion threshold for a second consecutive month.The official non-manufacturing PMI, covering services and construction, was unchanged at 49.0 for a second straight month.The composite PMI improved slightly to 49.5 from 49.3 in July.China's economy has been under mounting strain, with Q2 GDP growth slowing to 4.3%, the weakest pace since late 2022, on soft domestic demand and a prolonged property slump.Retail sales and industrial output both slowed in July, unemployment ticked higher, and growth in industrial profits cooled to its weakest pace this year.Exports have remained a bright spot, with double-digit growth for most of the year as a global AI infrastructure spending boom lifts demand for Chinese tech goods, while policymakers have pledged further fiscal and monetary support, though economists expect its scale to be limited.China's factory activity improved in August but remained in contraction for a second straight month, according to an official survey released Monday, adding to signs that economic growth has lost momentum amid persistently weak domestic demand. The National Bureau of Statistics' official manufacturing purchasing managers' index rose to 49.8 from 49.2 in July, beating the median forecast of 49.6 in a Reuters poll of economists, though it remained below the 50-point line separating expansion from contraction.The official non-manufacturing PMI, which covers services and construction, was unchanged at 49.0, showing no improvement from July's reading and suggesting the recovery seen in manufacturing has not yet extended to the broader economy. The composite PMI, which blends both measures, edged up to 49.5 from 49.3, a modest improvement that nonetheless keeps the overall gauge in contractionary territory.The data come against a backdrop of mounting strain on China's economy, with growth slowing to 4.3 percent in the second quarter, the weakest pace since late 2022, as soft domestic demand and a prolonged property market slump continue to weigh on activity. The malaise deepened further heading into the second half of the year, with consumer spending stalling, urban investment contracting at a faster pace, and unemployment ticking higher. Retail sales and industrial output both slowed in July, while growth in industrial profits cooled to its weakest pace so far this year.Exports have remained one of the few pillars supporting growth, cushioning some of the drag from weaker domestic conditions as a global boom in AI infrastructure spending lifts demand for Chinese-made technology goods, with outbound shipments recording double-digit growth for most of the year. Chinese policymakers have pledged to roll out new support measures in a timely manner and have flagged room for further fiscal spending and monetary easing, though economists caution that the scale of any such support is likely to remain limited given the structural nature of the property and demand-side challenges facing the economy. This article was written by Eamonn Sheridan at investinglive.com.