China’s economic activity weakened further in July as both the manufacturing and services sectors slipped into contraction, underscoring mounting challenges facing the world’s second-largest economy amid soft domestic demand and persistent external headwinds.
Official data released by the National Bureau of Statistics (NBS) on Friday showed that China’s Manufacturing Purchasing Managers’ Index (PMI) fell to 49.2 in July, down from 49.7 in June, marking the fourth consecutive month that factory activity remained below the 50-point threshold separating expansion from contraction.
Meanwhile, the Non-Manufacturing PMI, which measures activity across the services and construction sectors, declined more sharply to 49.0, compared with 50.2 in June, indicating the services sector also slipped into contraction after recording modest growth in the previous month.
The weaker-than-expected readings point to slowing momentum across China’s industrial and domestic economy as policymakers continue efforts to stabilise growth.
The manufacturing sector continued to face headwinds from subdued domestic demand, cautious business sentiment and an uncertain global trade environment.
A PMI reading below 50 indicates that more manufacturers reported deteriorating business conditions than improvements during the month.
Factory activity has been weighed down by weaker export demand in several major markets, ongoing adjustments in China’s property sector and cautious investment by businesses amid geopolitical uncertainties.
The latest reading suggests industrial production remains under pressure despite targeted policy measures introduced by Beijing to support manufacturing and technological upgrading.
The more pronounced decline in the non-manufacturing PMI signals that China’s services sector is also facing softer demand.
The index covers industries including retail trade, transportation, hospitality, real estate, finance and construction, making it an important gauge of domestic economic activity.
The fall below the neutral 50-point mark suggests consumer spending and business activity weakened during the month, raising concerns that domestic demand has yet to recover sufficiently to offset slower external growth.
The latest figures indicate that both manufacturing and services—the two main pillars of China’s economy—are now experiencing contraction simultaneously.
The July PMI readings are likely to reinforce expectations that Chinese authorities may introduce additional policy support to sustain economic growth during the second half of the year.
