China’s July manufacturing PMI falls to 49.2, first contraction in five months
China’s official manufacturing purchasing managers’ index dropped to 49.2 in July from 50.3 in June, slipping into contraction for the first time in five months and missing the median forecast of 50.1. The new orders sub-index tumbled to 48.5, while production retreated to 49.9. The non-manufacturing PMI fell to 49.0, the lowest since December 2022, and the composite output index eased to 49.3%. The economy grew 4.3% in the second quarter, down from 5% in the first quarter, the slowest pace since late 2022. The Politburo pledged to boost policy support to counter headwinds.
Data released on July 31 showed that the manufacturing purchasing managers’ index fell to 49.2 in July, down 1.1 points from June, marking its first move into contraction territory in five months and undershooting the median estimate of 50.1. Among the five main sub-indexes, the production gauge dropped 1.5 points to 49.9, new orders slid to 48.5 from 51.2 in June, and new export orders eased slightly to 49.9 from 50.1. The main raw material purchase price index fell to 53.2, while the factory-gate price index deepened its contraction to 47.8.
The non-manufacturing business activity index, which covers services and construction, came in at 49.0 in July, down 1.2 points from June and the lowest level since December 2022. The composite PMI output index registered 49.3%, a decline of 1.3 percentage points from the previous month. A reading above 50 indicates expansion, while a reading below 50 signals contraction.
China’s second-quarter gross domestic product grew 4.3% year-on-year, slower than the 5% increase in the first quarter and the weakest quarterly pace since the fourth quarter of 2022. The Politburo held a meeting on July 30, emphasizing the need to pay close attention to difficulties and challenges in economic operations, promptly introduce pragmatic and effective incremental policies, step up counter-cyclical adjustments, intensify efforts to expand domestic demand and optimize supply, vigorously develop trade in services, and promote balanced trade development.