China Caixin PMI Manufacturing rose to 49.9 in July, up from 49.4 and beat expectation of 49.6. Markit noted that production stabilized amid slight uptick in new work. However, employment fell at the quickest pace for give months. Also, factory gate prices declined for the first time since January.
Commenting on the China General Manufacturing PMI™ data, Dr. Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group said:
“The Caixin China General Manufacturing PMI rose to 49.9 in July, although it remained in contractionary territory.
“The subindices for new orders and output both returned to expansionary territory, and the gauge for new export orders rose slightly, though it remained in contractionary territory. This indicates that domestic demand recovered, and overseas demand was stable. The subindex for employment dipped further into negative territory, suggesting that the labor market didn’t improve.
“While the subindex for stocks of purchased items fell into contractionary territory, the measure for stocks of finished goods dropped further into decline, reflecting that increased orders consumed inventories to some extent. The measure for future output jumped in July, pointing to an increase in confidence among businesses. The gauge for output charges dropped into negative territory, while that for input costs remained in positive territory despite a mild fall. This was a sign of downward pressure on the profitability of downstream companies.
“China’s manufacturing economy showed signs of recovery in July. Business confidence rebounded, reflecting the strong resilience in the economy. Policies such as tax and fee reductions designed to underpin the economy had an effect. The situation may strengthen policymakers’ insistence to regulate the property market and the finance industry.”
