Manufacturing activity slowest for 2 years
Print Edition
ACTIVITY in China’s smaller manufacturing companies slumped to a two-year low in July on reduced orders and weak exports, dampening hopes of an economic recovery, a survey said.
The final Caixin China Manufacturing Purchasing Managers’ Index, which was released yesterday, dropped to 47.8 points for the month, its lowest level since July 2013, and down from 49.4 a month earlier.
The index has been below the neutral line of 50 points for the past five months.
The final reading was also 0.4 points lower than the preliminary figure released in late July.
“Weak domestic demand remained the main drag on manufacturing industries,” said Qu Hongbin, chief economist at HSBC China.
“It reveals a vulnerable economy behind the robust financial market, and manufacturers are still deep in trouble,” he said.
The economic slowdown might continue into the second half of the year, and require more stimulus measures, he said.
Among the sub-indexes, falls in new orders and new export orders weighed heaviest on the main gauge, while the volume of purchases saw its steepest drop in three years.
Selling prices also fell in July as firms slashed charges in a bid to land new contracts.
“Following a slight improvement in June, the total new business received by Chinese manufacturers fell in July,” the report said.
“Data signaled that both domestic and foreign demand softened in the latest survey period, as highlighted by the fact that new exports also fell in July after picking up slightly in June,” it said.
The index’s poor showing undermined economic data for June that pointed to improvements in trade, industrial production, retail sales and the housing market.
The Caixin PMI, which tracks mostly smaller, private companies, is compiled by financial information provider Markit. It was formerly known as the HSBC PMI.
July’s official PMI, which measures activity among large-scale state-owned firms, dipped to 50 after four months of expansion.
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