China's factory activity shrinks, adding to concerns over economic recovery: Report
New Delhi, Aug 1
China's factory activity unexpectedly slipped into contraction in July for the first time since February as weak domestic demand and weather-related disruptions weighed on production, increasing pressure on policymakers to roll out additional measures to support the economy, according to a report.
According to CNBC's analysis, the official manufacturing Purchasing Managers' Index (PMI) fell to 49.2 in July from 50.3 in June.
A reading below the 50-mark indicates contraction in manufacturing activity.
The latest reading also came in below market expectations and marked the weakest factory activity since February, ending a four-month period of expansion that had been supported by exporters accelerating shipments ahead of higher US tariffs.
Moreover, the slowdown was driven primarily by weaker domestic demand with the sub-index for new orders falling to 48.5, its lowest level in more than three years.
Export orders also softened during the month, indicating easing external demand after a period of front-loaded shipments.
Beyond manufacturing, economic activity also weakened across other sectors.
China's construction PMI dropped to a record low, while the services sector expanded at its slowest pace since the initial Covid-19 lockdowns.
The composite PMI -- which combines manufacturing and non-manufacturing activity --also slipped below the 50-point threshold, reflecting a broader slowdown in business activity.
Additionally, Chinese authorities partly attributed the weaker readings to typhoons that disrupted factory operations and construction projects in several regions during July.
The data comes a day after China's top policymakers acknowledged growing challenges facing the economy and pledged to accelerate fiscal spending and introduce additional policy measures to support growth in the second half of the year.
— IANS
Reader Comments
Let's be careful not to gloat too much. If China's economy slows down significantly, it will ripple across Asia and the world. We are also connected through trade and supply chains. Rather than celebrating, we should analyze how this could affect our own exports and make contingency plans.
Weather disruptions are a convenient excuse. The underlying issue is weak domestic consumption and a property market that's still in the dumps. They can't just keep relying on infrastructure and exports. Even their own people aren't spending the way they used to.
In our local business circles, we've been seeing more inquiries shifting from Chinese suppliers to Indian manufacturers for electronics components. It doesn't mean China is finished, but their long-term dominance is definitely being questioned. Good for Make in India. 🇮🇳👍
Every time China sneezes, the global economy catches a cold. But let's face it, we're not fully prepared to fill that void. Our logistics, land acquisition and tax structures need serious reforms. Modi ji's PLI schemes help, but there's a long way to go before we can rival Chinese scale.
Honestly, the only reason we're all talking about China's PMI is because it affects our markets. The moment our own PMI dips below 49, you'll see a different story. We need to focus inward and ensure our own industrial growth stays on track. No point counting others' misfortunes.
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.