Situation in China
China’s manufacturing growth in July slowed to its lowest level in 15 months as export demand weakened and factories coped with disruptions in supplies of raw materials and components, two surveys found.
A monthly purchasing managers’ index released by Caixin, a business magazine, declined to 50.3 from June’s 51.3 on a 100-point scale on which numbers above 50 show activity increasing. A separate PMI issued by an industry group and the Chinese statistics agency fell to 50.4 from 50.9.
China rebounded relatively quickly from the coronavirus pandemic, but manufacturers have struggled as they wait for supply chains to return to pre-pandemic activity and foreign markets are hindered by renewed disease outbreaks.
Caixin’s measure of new export orders fell to 50.3 from June’s 51.3.
China’s economy expanded by 7.9% over a year earlier in the three months ending in June, though that was magnified by comparison with early 2020, when factories and shops closed to fight the coronavirus pandemic. Output rose 1.3% compared with the previous quarter, up from the previous quarter’s 0.6% growth but one of the past decade’s weakest readings.
Exports rose 32.2% in June over a year ago but the government warned that might weaken in the second half of the year.
The latest survey readings reinforce our view that the economy will tread water during the second half of the year, said Julian Evans-Pritchard of Capital Economics in a report. It shouldn’t be cause for alarm given how strong activity has been recently.