China July official PMI likely to show factories struggling for traction

PUBLISHED : Thursday, 28 July, 2016, 1:02am
UPDATED : Thursday, 28 July, 2016, 1:02am

The manufacturing sector struggled for growth in July, a Reuters poll showed, adding to expectations that Beijing will step up measures to boost growth in the world’s second-largest economy.

The official manufacturing Purchasing Managers’ Index is expected to be 50.0 in July, the same as in June, according to the medium forecast of 23 analysts polled by Reuters.

The neutral 50.0 mark separates expansion in activity from contraction on a monthly basis.

After expanding for three consecutive months from March to May, growth in the mainland’s factory sector stalled in June, suggesting a bounce in activity is ­fizzling.

Second-quarter economic data was slightly stronger than expected, thanks to a housing boom and government infrastructure spending spree that are boosting demand for materials from cement to steel, but private investment growth has shrunk to record lows, suggested renewed weakness ahead.

China’s softening PMI data suggests growth has peaked and capital outflows may revive

Profits earned by the country’s industrial firms grew at the fastest pace in three months in June, data showed yesterday, suggesting government spending is helping to ease financial strains for some companies.

But profit gains were spread unevenly across industries and were concentrated in just a few sectors including electronics, steel and oil processing.

The data also showed debt levels continued to grow, and the statistics bureau said some firms were facing difficulty getting ­capital.

Growth in China’s factory sector stalls, increasing chance of more stimulus measures to boost economy

Sheng Songcheng, director of the Survey and Statistics Department at the People’s Bank of China, said recently that China had already fallen into a “liquidity trap” where increased money supply was being absorbed by firms that were not in turn investing the cash.

Top leaders pledged on Tuesday to keep economic growth steady in the second half of the year, while creating favourable conditions for supply-side reforms, state media reported.