China’s factory activity fell to 15-month low at 50.3 in July due to a combination of COVID outbreak, extreme weather and rising material cost. New orders showed a contraction for the first time since May 2020, likely becoming a drag to the economy.
The Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) data in July fell from 51.3 in June. Value of above 50 indicates manufacturing expansion.
“That meant while the manufacturing industry continued to grow, the rate of expansion slowed further…Supply in the manufacturing sector continued to expand, while demand contracted for the first time in more than a year,” Wang Zhe, senior economist at Caixin Insight Group, said in a note accompanying the data release.
Recovery not yet solid
“Entrepreneurs stayed positive about the business outlook, but the measure for future output expectations in July was lower than its long-term average and was the lowest in 15 months,” Wang said, adding that the July’s PMI data “suggested the recovery of the economy is not yet solid.”
The Caixin/Markit data showed similar tendency with the official PMI data separately released by China’s National Bureau of Statistics. The official PMI fell to 17-month low of 50.4 in July.