China’s small factory activity strengthened in July to highest level since January 2011

Caixin/Markit manufacturing purchasing managers’ index (PMI) rose to 52.8 in July from 51.2 in June, with a reading above 50 signifying growth

The survey followed official PMI data released on Friday which showed a positive outlook for larger Chinese manufacturers

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The Caixin/Markit manufacturing purchasing managers’ index (PMI), released on Monday, rose to 52.8 last month from 51.2 in June. Photo: Xinhua

Published: 10:11am, 3 Aug 2020Updated: 10:58pm, 3 Aug 2020

China’s manufacturing sector showed a further rebound in July to its strongest level since January 2011, but weak foreign demand and downward pressure on employment showed there is still some way to go to reach pre-coronavirus levels.

The Caixin/Markit manufacturing purchasing managers’ index (PMI), released on Monday, rose to 52.8 last month from 51.2 in June, beating analysts expectations and showing production at smaller Chinese factories was improving. The 50-point mark separates contraction from growth.

The reading was another bright spot for China’s economy following Friday’s official manufacturing PMI that indicated factory activity among larger firms improved slightly to 51.1 in July from 50.9 in June. The official non-manufacturing PMI, also released by the National Bureau of Statistics on Friday, eased to 54.2 in July from 54.4 the previous month, as a strong rise in construction was offset by a decline in service sector activity.

The Caixin index has now improved for the last three months, with China continuing to contrast sharply with the United States and Europe, both of which reported last week record contractions in gross domestic product in the second quarter.

Flare-ups of the epidemic in some regions did not hurt the improving trend of the manufacturing economy

Wang Zhe

“The Caixin China General Manufacturing PMI stood at 52.8 in July, up from 51.2 the previous month, reflecting that the manufacturing sector continued to expand amid the ongoing economic recovery,” said Wang Zhe, senior economist at Caixin Insight Group.

“Overall, flare-ups of the epidemic in some regions did not hurt the improving trend of the manufacturing economy, which continued to recover as more epidemic control measures were lifted. The supply and demand sides both improved, with relevant indicators maintaining strong momentum. However, we still need to pay attention to the weakness in both employment and overseas demand.”