China's Caixin Manufacturing PMI eases to 50.8 in July, 8-month lows

China's July Caixin manufacturing PMI came in at 50.8 vs. 50.8 expected and 51.0 last, with output and new business both expanding at softer rates.

On Tuesday, the purchasing managers' index (PMI) for China's manufacturing sector arrived at 51.2 in July, down from 51.5 in June, the National Bureau of Statistics (NBS) reported.

Summary

Operating conditions across China’s manufacturing sector improved at the slowest pace for eight months in July, with output and new business both expanding at softer rates. Notably, new export orders fell at the steepest pace for 25 months. A further reduction in staffing levels meanwhile contributed to a sustained increase in backlogs of work. On the price front, the rate of input cost inflation weakened since June, but remained elevated, while output charges rose only modestly.

Optimism towards the year ahead remained relatively subdued amid concerns surrounding tough market conditions, strict environmental policies and the potential impact of the US-China trade war.

The headline seasonally adjusted Purchasing Managers’ Index™ (PMI™) – a composite indicator designed to provide a single-figure snapshot of operating conditions in the manufacturing economy – fell from 51.0 in June to 50.8 in July. Although still above the neutral 50.0 mark, the latest figure highlighted the slowest improvement in the health of the sector since November 2017.

Commenting on the China General Manufacturing PMI™ data, Dr. Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group said: “The Caixin China General Manufacturing PMI slipped to 50.8 in July from June. The reading has not been this low since November 2017. The sub-indexes for output and new orders both fell, but remained in expansionary territory, while the employment subindex picked up despite remaining in contractionary territory. New export orders shrunk at the fastest pace since June 2016, indicating the export market continued to deteriorate.”