China's official manufacturing purchasing managers' index (PMI) continued to improve in August, marking the third consecutive monthly increase despite the index remaining in contraction territory.

With strong growth-reinforcing signals from the country's top policymakers and a package of stimulus measures being implemented now, it is expected that the index will return to expansion territory in September and maintain the pace through the fourth quarter of the year, analysts told the Global Times.

The official PMI came in at 49.7 in August, up 0.4 from the previous month's 49.3, data from the National Bureau of Statistics (NBS) showed on Thursday.

A reading below 50 indicates a contraction in the manufacturing sector, while above 50 indicates expansion.

Among the 21 surveyed industrial lines, 12 sectors reported month-on-month expansion in August, up from 10 in July.

Sub-indexes including production index and new orders index recorded 51.9 and 50.2 each, up 1.7 and 0.7 points from July, respectively, both hitting highs in the past five months. In particular, the new orders index rose to the expansion range for the first time since April, indicating improvement in production demand.

Driven by accelerating activity in manufacturing and market demand, corporate purchasing activities have also improved, pushing the purchasing volume index to 50.5 in August, 1.0 points higher than July.

In terms of industrial scale, the PMI of large industrial enterprises, mid-sized and small firms all recorded improvements on a month-on-month basis.

Following the recent concentrated roll-out of economic stimulus measures, enterprises have further reinforced their confidence in investment and market sales.

The index reflecting expectations for production and business activities came in at 55.6 in August, an increase of 0.5 points from the previous month, holding at a relatively high range for the second consecutive month.

The index showed that expectations across all major sectors except for textiles remained positive.

Sectors such as agriculture and food processing and automobile manufacturing showed the most movement with their index reading hitting more than 60, signaling that the enterprises are relatively optimistic about the near-term outlook, NBS statistician Zhao Qinghe said Thursday.

Tian Yun, a Beijing-based veteran economist, told the Global Times on Thursday that there is a high chance that the manufacturing PMI will ride out of contraction territory in September and maintain the pace through the fourth quarter.

Despite the overall improvement of domestic manufacturing, Zhao said that enterprises are still facing insufficient market demand, and the foundation for recovery of the manufacturing industry needs to be further consolidated.

"There remain some restraints on the expansion of domestic manufacturing sector," Wu Chaoming, a deputy head of the Chasing Research Institute, told the Global Times on Thursday.

Apart from a stagnant real estate sector, weak demand from overseas markets is also a drag on China's exports, which would have a negative impact on industrial production.

"The manufacturing industry still needs some time to digest the backlog of inventory," he said.