China’s factory activity fell back to contraction in July: Caixin PMI

Caixin/S&P Global manufacturing purchasing managers’ index (PMI) fell to 49.2 in July from 50.5 in June

Weak data has raised challenges for policymakers seeking to revive economic momentum in China’s post-Covid recovery

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China’s Caixin/S&P Global manufacturing purchasing managers’ index (PMI) fell to 49.2 in July, down from 50.5 in June, data released on Tuesday showed. Photo: Xinhua

Published: 12:28pm, 1 Aug 2023Updated: 9:29am, 2 Aug 2023

China’s factory activity swung to contraction in July, a private sector survey showed on Tuesday, with supply, demand and export orders all deteriorating as firms blamed sluggish market conditions at home and abroad.

The Caixin/S&P Global manufacturing purchasing managers’ index (PMI) fell to 49.2 in July from 50.5 in June, missing analysts’ forecasts of 50.3 and marking the first decline in activity since April. The 50-point index mark separates growth from contraction.

The data was in line with the government’s official PMI on Monday, raising challenges for policymakers seeking to revive momentum in China’s post-pandemic recovery amid high youth unemployment, mounting local debt pressure and weak demand.

The Caixin survey showed manufacturing output shrank for the first time in six months while new orders saw the quickest reduction since December. New orders remained unchanged at makers of investment goods, but fell at producers of consumer and intermediate goods.

New export orders contracted at the steepest pace since September 2022 amid weakening global demand.

Employment across the manufacturing sector fell for the fifth straight month in July, although the pace of job shedding eased from June. Lower payroll numbers were attributed to reduced sales and cost-cutting by factory owners.

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