Key Takeaways
- China's manufacturing PMI fell to 50.9 in July, missing analysts' forecast.
- New export orders returned to growth but at a marginal pace.
- Stocks of purchases rose for an eighth consecutive month.
Beijing: China’s manufacturing sector experienced its slowest expansion rate in four months during July, according to a private-sector survey. The RatingDog China General Manufacturing Purchasing Managers’ Index (PMI) dropped to 50.9 from 51.7 in June, missing analysts' expectations of 51.5.
The PMI is a key indicator used by economists and policymakers to gauge the health of the manufacturing sector. A reading above 50 indicates expansion, while below 50 suggests contraction. The latest figure reflects growing concerns over slowing economic growth, weak domestic demand, and rising production costs in China.
While new export orders showed signs of recovery after contracting for two consecutive months, their increase was only marginal. This suggests that external markets remain challenging despite some improvement.
Despite the slowdown, manufacturers added staff for a second month in succession, with the pace of job creation being the fastest since August 2023. However, firms cut purchasing activity for the first time since November 2025, indicating caution among businesses regarding future demand and costs.
Stocks of purchases continued to rise for an eighth consecutive month, marking the longest such run since 2006-2007. This trend suggests that manufacturers are optimistic about future production levels but are also being cautious with their inventory management.
Price pressures eased further in July. Input price inflation slowed to a six-month low, while output prices remained stable as firms held off on raising charges. This indicates that cost increases have moderated for now, providing some relief to businesses and consumers alike.
China’s leaders pledged at the end of July to support the slowing economy by accelerating fiscal spending on already-budgeted infrastructure projects in the remainder of the year. However, they did not plan any major new stimulus measures, suggesting a cautious approach to economic management.
Official data released earlier this month showed that China's second-quarter economic growth was its slowest in over three years at 4.3%, missing the lower end of the full-year target range of 4.5% to 5.0%. This underscores the broader challenges facing the Chinese economy and highlights the need for continued policy support.
