China’s manufacturing slowdown stabilised in July, says PMI data
The slowdown in China’s manufacturing sector stabilised in July, according to a private survey, although lingering concerns over the impact of the US-China trade dispute remained.
The Caixin China General Manufacturing PMI index, published on Thursday, rebounded to 49.9 during the month from 49.4 in June. It is the second month in a row that China’s manufacturing activity has shrunk, with any reading of below 50 representing a contraction. However,the figure was higher than the reading of 49.6 forecast by economists polled by Reuters.
China’s economy has been under pressure this year, with gross domestic product growth in the second quarter slumping to a near three-decade low. Exports from the country, the world’s second-biggest economy, have been hit by an ongoing trade war with the US.
Still, the Caixin survey reported that business confidence in China was picking up. It pointed to firmer domestic demand for manufactured goods, which partly offset weak export orders amid trade tensions and a slowing global economy.
“On balance, the uptick in July manufacturing PMIs was the result of domestic strength overshadowing external weakness,” said Julian Evans-Pritchard, senior China economist at Capital Economics.
However, Chinese manufacturers continued to express concern about the impact of trade tensions with the US, which has slapped tariffs on billions of dollars of Chinese goods.
“The subindices for new orders and output both returned to expansionary territory, and the gauge for new export orders rose slightly, though it remained in contractionary territory. This indicates that domestic demand recovered, and overseas demand was stable,” said Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group.
“China’s manufacturing economy showed signs of recovery in July. Business confidence rebounded, reflecting the strong resilience in the economy. Policies such as tax and fee reductions designed to underpin the economy had an effect,” he added.