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Activity in China’s manufacturing sector experienced a decline for the fourth consecutive month in July, as factories entered their traditional off-peak season, compounded by record-high temperatures and heavy rains impacting production.
The manufacturing purchasing managers’ index (PMI) for July stood at 49.3, a slight decrease from 49.7 in June, according to data released by the National Bureau of Statistics. A reading below 50 signals a contraction in activity.
The manufacturing PMI moved into contraction territory in April amid rising trade tensions between China and the US, dropping from 50.5 the previous month to 49. It hovered around similar levels in May and June, recording 49.5 and 49.7, respectively.
While manufacturing output continued to grow, market demand slowed somewhat, noted Zhao Qinghe, a senior statistician at the bureau. Despite this, market sentiment has improved over recent months.
The sub-indices for production and new orders declined to 50.5 and 49.4 from 52 and 50.2 in June, respectively. Conversely, the outlook index for production and business activity increased to 52.6 from 52, suggesting growing confidence among manufacturers regarding the near-term market environment.
The non-manufacturing PMI, which covers sectors such as construction and services, decreased slightly to 50.1 from 50.5 in June but still indicated expansion.
The services PMI dipped marginally to 50 from 50.1, while the construction PMI fell more noticeably to 50.6 from 52.8, mainly due to slowed activity caused by ongoing high temperatures and heavy rains in certain regions, Zhao explained.
The combined PMI output index, which aggregates manufacturing and non-manufacturing data, declined to 50.2 from 50.7 but remained above the growth threshold, pointing to continued overall expansion in production and operations within Chinese firms.
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