China’s factory activity unexpectedly sinks to weigh on weak economy

The level of economic prosperity in China has fallen

Chinese manufacturing’s recovery from COVID-19 shutdowns unexpectedly faltered in July as activity sank, a survey showed Sunday, adding to pressure on the struggling economy as fresh virus flare-ups and a darkening global outlook weighed on demand, Qazet.az reports.

Factory activity was depressed by weak global demand and anti-virus controls that are weighing on domestic consumer spending, according to the national statistics agency and an official industry group, the China Federation of Logistics & Purchasing.

A monthly manufacturing purchasing managers’ index (PMI) issued by the federation and the National Bureau of Statistics (NBS) retreated to 49 in July from June’s 50.2. Sub-measures of new orders, exports and employment declined.

Readings below 50 on a 100-point scale indicate activity declining. The July figure marked the lowest in three months. Analysts polled by Reuters had expected a reading of 50.4.

“Downward pressure is great,” said economist Zhang Liqun in a statement issued by the Federation. “The impact of the epidemic is still on the rise.”

“The level of economic prosperity in China has fallen, the foundation for recovery still needs consolidation,” NBS senior statistician Zhao Qinghe said in a statement on the NBS website.

Continued contraction in the energy-intensive industries, such as petrol, coking coal and ferrous metals, contributed most to pulling down the July manufacturing PMI, he said.

Sub-indexes for output and new orders fell by 3 points and about 2 points in July, respectively, while the employment sub-index edged down by 0.1 point.

Weak demand has constrained recovery, Bruce Pang, chief economist and head of research at Jones Lang Lasalle Inc, said in a research note. “Q3 growth may face greater challenges than expected, as recovery is slow and fragile,” he added.

The official non-manufacturing PMI in July fell to 53.8 from 54.7 in June. The official composite PMI, which includes manufacturing and services, fell to 52.5 from 54.1.