BEIJING: Chinese factory activity weakened in July to its lowest level since the start of the pandemic, data showed on Saturday, as manufacturing was hit by slowing demand, weak exports and extreme weather.
Purchasing Managers’ Index (SME), a key gauge of manufacturing activity in the world’s second-largest economy, declined to 50.4 in July from 50.9 in June. National Bureau of Statistics Said.
A PMI greater than 50 indicates expansion, while a figure below that indicates contraction.
Analysts said the readings appeared to flatten between April and June, and July marks the first time a decline, the lowest PMI figure since February 2020.
While the figure was worse than many forecast, it was still above the 50-point mark that separates growth from contraction.
China’s fragile economic recovery is threatened by a recent resurgence of the delta version of the coronavirus that is threatening to curtail holiday consumption in the summer.
“Overall, China’s economy continues to maintain the pace of expansion, but the pace has slowed,” he said. nbs Senior statistician Zhao Qinghe.
“In July, some companies entered an equipment maintenance period that, in addition to the effects of extreme weather such as local high temperatures, floods and natural disasters,[caused]relatively weak manufacturing growth compared to the previous month.”
Although Zhao did not mention specific extreme weather events, deadly floods in central Henan province this month caused more than 70 deaths and billions of yuan in damage. Henan is home to major Foxconn plants that manufacture Apple iPhone.
Overall, export and import indices fell this month, after a major port closure in the first three weeks of June halted international trade at a key point in the global shipping network.
“The most alarming sign is the new export orders index, which (at 47.7 per cent) is at its lowest level since July last year,” said Zhiwei Zhang, the company’s chief economist. Pinpoint Asset Management in a note.
“Exports have been the main growth driver this year. This PMI data release makes me even more cautious about the growth outlook in the second half.”
China’s non-manufacturing PMI also slowed slightly by 0.2 percentage points to 53.2 this month, although it was still showing growth.
In particular, the construction industry was severely affected by “high temperatures and adverse weather factors such as rain, floods and disasters”, Zhao said.
However, the service industry improved slightly with expanded sectors including aviation, catering and housing.
Purchasing Managers’ Index (SME), a key gauge of manufacturing activity in the world’s second-largest economy, declined to 50.4 in July from 50.9 in June. National Bureau of Statistics Said.
A PMI greater than 50 indicates expansion, while a figure below that indicates contraction.
Analysts said the readings appeared to flatten between April and June, and July marks the first time a decline, the lowest PMI figure since February 2020.
While the figure was worse than many forecast, it was still above the 50-point mark that separates growth from contraction.
China’s fragile economic recovery is threatened by a recent resurgence of the delta version of the coronavirus that is threatening to curtail holiday consumption in the summer.
“Overall, China’s economy continues to maintain the pace of expansion, but the pace has slowed,” he said. nbs Senior statistician Zhao Qinghe.
“In July, some companies entered an equipment maintenance period that, in addition to the effects of extreme weather such as local high temperatures, floods and natural disasters,[caused]relatively weak manufacturing growth compared to the previous month.”
Although Zhao did not mention specific extreme weather events, deadly floods in central Henan province this month caused more than 70 deaths and billions of yuan in damage. Henan is home to major Foxconn plants that manufacture Apple iPhone.
Overall, export and import indices fell this month, after a major port closure in the first three weeks of June halted international trade at a key point in the global shipping network.
“The most alarming sign is the new export orders index, which (at 47.7 per cent) is at its lowest level since July last year,” said Zhiwei Zhang, the company’s chief economist. Pinpoint Asset Management in a note.
“Exports have been the main growth driver this year. This PMI data release makes me even more cautious about the growth outlook in the second half.”
China’s non-manufacturing PMI also slowed slightly by 0.2 percentage points to 53.2 this month, although it was still showing growth.
In particular, the construction industry was severely affected by “high temperatures and adverse weather factors such as rain, floods and disasters”, Zhao said.
However, the service industry improved slightly with expanded sectors including aviation, catering and housing.
.