China's July Manufacturing PMI Falls to 49.2, Below Expectations

Will Hopes for Economic Recovery Be Derailed?

AFP Yonhap News

Concerns have been raised that expectations for a recovery in China's manufacturing sector may be dampened after the country's July Purchasing Managers' Index (PMI) came in below forecasts.

On July 31, China's National Bureau of Statistics announced that the manufacturing PMI for July was 49.2, the lowest level in five months. The expert consensus forecast compiled by Reuters was 50.0. The manufacturing PMI is an indicator based on surveys of corporate purchasing managers and reflects the trend of the business cycle. A reading above the baseline of 50 indicates expansion, while below 50 signals contraction.

By company size, the PMI for large enterprises stood at 49.5 (down 1.2 points from the previous month), medium-sized enterprises at 49.7 (down 0.8 points), and small enterprises at 47.4 (down 0.8 points), all remaining below the baseline.

All five key sub-indices that make up the manufacturing PMI also performed poorly. The production index (49.9, down 1.5 points from the previous month) and new orders index (48.5, down 2.7 points) saw relatively larger declines. The raw material inventory index (48.3, down 0.1 points) and supplier delivery time index (49.5, down 0.4 points) also decreased. The employee index, which indicates employment conditions in manufacturing (49.0, up 0.5 points from the previous month), was the only sub-index to rise, but it still did not surpass the baseline.

Meanwhile, China's manufacturing PMI stayed below the baseline of 50 for eight consecutive months from April to November last year, before rebounding to 50.1 in December. However, it slipped back into contraction territory at 49.3 in January and 49.0 in February of this year. Since then, it reached a one-year high of 50.4 in March, followed by strong performances in April (50.3), May (50.0), and June (50.3).

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