China's official manufacturing PMI drops in July

Data revealed by the Chinese Government showed that the country's manufacturing PMI dropped to 49.9 in July as against 50.0 in June. However, Caixin's China General Manufacturing PMI (Purchasing Mangers’ Index) rose to 50.6 in July as against 48.6 in June on the back of new work arising out of strong domestic demand.

The 50-point mark separates growth from contraction. 

PMI had expanded for three consecutive months till June. 

Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group said: “The Caixin China General Manufacturing PMI came in at 50.6 for July, up significantly by 2.0 points from the reading for June, marking the first expansion since February 2015. The sub-indexes of output, new orders and inventory all surged past the neutral 50- point level that separates growth from decline. This indicates that the Chinese economy has begun to show signs of stabilizing due to the gradual implementation of proactive fiscal policy. But the pressure on economic growth remains, and supportive fiscal and monetary policies must be continued.”

IHS Market and Caixin, in a statement, said, “July survey data signalled a renewed upturn in operating conditions faced by Chinese manufacturers, with output, new orders and buying activity all returning to growth. However, employment continued to decline and at a solid pace, which in turn contributed to the quickest rise in outstanding business since March 2011.”

The survey showed that the headline index rose in July because of the renewed rise in total new business. It said,” Though moderate, it was the first time that overall new orders had increased since March.”

Respondents commented that new products and improved marketing strategies had boosted new business.

The statement said, “In response to improved inflows of total new work, manufacturers raised their production for the first time in four months. The rate of expansion, though modest, was the fastest seen in two years.”