Chinese manufacturing activity contracted for a fourth straight month in July, data showed on Monday, as the country’s biggest economic engines continued to grapple with weak demand and laggard private spending.
The official manufacturing purchasing managers’ index (PMI) was 49.3 in July, data from the National Bureau of Statistics showed. The reading was slightly higher than expectations of 49.2 and the prior month’s reading of 49.0.
A reading below 50 indicates contraction, with manufacturing activity now having shrank for a fourth consecutive month. Still, the reading showed some improvement over the past few months.
Weakness in Chinese manufacturing activity- which is one of the country’s biggest economic drivers- has persisted this year despite the lifting of anti-COVID restrictions in January.
The sector is grappling with a severe slowdown in international demand, owing to weak global economic conditions, while local demand has also dried up amid slowing capital and retail spending.
Weakness in China’s real estate sector has also dented demand for manufactured goods, which in turn has weighed on the broader economy.
This was reflected in the non-manufacturing PMI, which fell to 51.5 in July from 53.2 in the prior month, while the composite PMI fell to 51.1 from 52.5.
The weak PMI readings for July come after data released earlier in the month showed that Chinese economic growth slowed substantially in the second quarter.
But this trend of weakening growth pushed up expectations of more stimulus measures from the government.
Chinese stocks rallied on Monday, while the yuan also strengthened, showing little reaction to the weak PMI data, Investing reported.
Markets were largely focused on more stimulus measures from the country, with officials set to unveil more supportive policies on Monday. Expectations of more policy support from Beijing had triggered a sharp rally in Chinese markets over the past week.
