Nikkei Chinese Edition recently reported that, according to data just released by the Chinese National Bureau of Statistics, China’s Manufacturing Purchasing Managers Index (PMI) for July is 49.3. The Chinese real estate market continued to slump, and the production growth of building materials was sluggish. Although the PMI was 0.3 percentage points higher than last month, it has been below the 50 threshold for four consecutive months. This is the first time since October 2019 that the PMI has seen such a stretch of low prints, when it was below 50 for six consecutive months.
The Chinese PMI is based on a survey of 3,200 manufacturing companies, aggregating data on items such as new orders, production and employees. A reading above 50 indicates expansion in manufacturing activity relative to the previous period, while a reading below 50 indicates contraction.
Looking at the composition of July’s PMI number, new orders as a primary indicator stood at 49.5. Production fell 0.1 percentage points to 50.2, exceeding 50 for 2 consecutive months. The employment index, which reflects employment trends, deteriorated. Numbers also showed smaller businesses are more pessimistic about the economy. Zhang Liqun, a researcher at the Development Research Center of the Chinese State Council, said that more than 60 percent of enterprises believe that current demand is insufficient. Many analysts said that policy makers may be hesitant to use aggressive stimulus to boost domestic consumption amid fears of rising debt risks, despite Beijing’s urgent desire to improve the economy.
Source: Nikkei Chinese, July 31, 2023