China Caixin Manufacturing PMI at 49.8... Contraction Phase After 9 Months

A private indicator reflecting the state of China's manufacturing sector has returned to contraction territory after nine months.

On the 1st, Chinese economic media Caixin reported that the July Manufacturing Purchasing Managers' Index (PMI) recorded 49.8. This is a 2-point drop from the previous month (51.8) and falls short of experts' expectations (51.4).

[Image source=Reuters Yonhap News]

The Caixin Manufacturing PMI, compiled by private financial information provider Caixin, surveys 650 manufacturing companies, most of which are export firms located in coastal regions. A figure above 50 indicates expansion in the economy, while below 50 indicates contraction.

The Caixin PMI had remained above 50 for eight consecutive months since last November, signaling an expansion phase, but this month it fell below 50, marking a shift to contraction.

In the Caixin Manufacturing PMI released that day, the new orders index entered contraction territory for the first time since August last year, while the export orders index remained above 50.

Due to the decline in new orders, the purchasing volume index also fell below 50 for the first time since October last year. The raw material inventory index, which gauges companies' outlook on future production activities, dropped below 50 for the first time this year.

Wang Zhe, a Caixin analyst, stated, "Overseas demand was stable in July, but domestic demand decreased," adding, "The biggest problem facing the Chinese economy currently is the lack of domestic demand and pessimistic market outlook." He further noted, "Chinese authorities need to implement stronger stimulus measures to boost market vitality and internal demand."

Meanwhile, the Manufacturing PMI for July released the previous day by the National Bureau of Statistics of China recorded 49.4, down 0.1 points from the previous month, continuing a contraction trend for the third consecutive month. The National Bureau of Statistics' PMI survey covers over 3,200 companies across China.

This content was produced with the assistance of AI translation services.