China’s factory activity expands at slowest pace in 17 months
- China’s official manufacturing purchasing managers’ index (PMI) drops to 50.4 in July from 50.9 in June
- The figure was the lowest since a major contraction in February last year at the height of the Covid-19 pandemic
China’s factory activity expanded in July at the slowest pace in 17 months as higher raw material costs, equipment maintenance and extreme weather weighed on business activity, adding to concerns about a slowdown in the world’s second-biggest economy.
Analysts had expected it to slip to 50.8. It was the lowest figure since the index slumped to 35.7 in February 2020, after China began lockdowns to control the coronavirus pandemic.
A subindex for raw material costs stood at 62.9 in July, compared with June’s 61.2, pointing to an increase in costs. High raw material prices have eaten into the profitability of industrial firms and deterred some Chinese exporters from taking on orders.
Authorities are eager to prevent high factory-gate prices being passed on to consumers, which would only add to current economic headaches as underlying demand remains weak.