Manufacturing activity stalls after 4 straight months of expansion
Print Edition
CHINA’S manufacturing business activity slowed slightly in July and only narrowly avoided a contraction.
The manufacturing purchasing managers’ index, a key measure of factory activity, fellow 0.2 points from June to 50, according to figures from the National Bureau of Statistics and the China Federation of Logistics and Purchasing.
Activity had been in expansion territory — over 50 points — in the four months through June. Last month’s data came in exactly on the line that demarcates growth and contraction.
Zhao Qinghe, a senior analyst at the bureau, attributed the dip to continued weakness in both domestic and overseas demand.
Companies’ planned production cutbacks for equipment repairs and technological upgrades, and unfavorable weather conditions also affected output, he said.
The production sub-index for July fell 0.5 points from June to 52.4, while the sub-index for new orders dropped 0.2 points to 49.9.
“The slight decrease was a normal fluctuation,” said Chen Zhongtao, an analyst at the China Logistics Information Center, who agreed with Zhao on unfavorable weather’s negative impact on production.
He downplayed the drop, saying that the fundamentals of the Chinese economy remain in good shape, as employment is stable and companies are generally positive on their business prospects.
Domestic demand will see bigger room for growth in the rest of the year, which is supported by a raft of infrastructure projects to be rolled out, he said.
Minister of Housing and Urban-Rural Development Chen Zhenggao said in April that as much as 1 trillion yuan (US$161 billion) in investment will be needed if China builds 8,000 kilometers of utility tunnels each year, not including indirect investment such as spending on steel, cement and machines.
In contrast to the lukewarm manufacturing activity, the nation’s services industry witnessed stronger growth momentum, with July’s PMI for the non-manufacturing sector rising 0.1 points from June to 53.9, its second consecutive monthly increase.
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