China’s factory activity improved in August but remained in the contraction territory for a second straight month, as a pickup in orders could not fully offset the impact of overall weak domestic demand and disruptions from extreme weather.The manufacturing purchasing managers’ index (PMI) was 49.8 in August, up from 49.2 in July, according to data released by the National Bureau of Statistics (NBS) on Monday. The reading was largely in line with the 49.85 projection from economists polled by the financial data provider WindThe monthly index measures factory activity through surveys of supply chain managers across various sectors. A reading above 50 indicates expansion, while one below 50 signals contraction. The index had ended a four-month growth streak in July.The new orders subindex, a gauge of manufacturing demand, rose to 50.6 in August from 48.5 in July, while a separate measure for new export orders came in at 50.1, up from 49.6 a month earlier.“The overall business climate in manufacturing improved visibly in August, with 16 out of 21 surveyed industries registering month-on-month gains,” said Huo Lihui, a statistician at the NBS, in a statement.Huo noted that “both production and demand expanded in tandem,” anchored by solid gains in hi-tech manufacturing and large firms.“The data came in a little stronger than market expectations,” said Lynn Song, chief economist for Greater China at ING, expecting this will set the stage for a slight recovery of the industrial production growth data for August when it’s out in a few weeks.