Private Caixin PMI at 50.4 in July, shows factories still growing

The private Caixin manufacturing purchasing managers' index ( PMI) came in at 50.4 in July, remaining in expansion territory but lower than the reading of 51.7 in June, due to weak demand, according to the survey.

Analysts said that the PMI data showed that the foundation of the expected manufacturing recovery is fragile, calling for an accelerated implementation of existing pro- growth policies in the third quarter, which will be a key window for China's economic recovery.

The Caixin PMI trend is in line with the official PMI data. The official manufacturing PMI came in at 49 in July, falling into contraction range after expanding at 50.2 in June, data from the National Bureau of Statistics showed on Sunday.

The recovery of manufacturing activity slowed in July due to overall weak demand, rising cost of energy and other raw materials and short- term heat waves, Zhou Maohua, a macroeconomic analyst at Everbright Bank, told the Global Times.

Both indexes for production and new orders declined from the previous months. Companies surveyed by Caixin said weak market demand, the continued impact of the pandemic and power shortages constrained industrial growth.

The manufacturing employment index for July came in at the lowest since May 2020 as companies cut costs and grappled with sluggish sales, according to the survey.

On the bright side, new export orders continued June's expansion trend, as external demand remained stable. Separate data also showed an increase in new orders for consumer and investment goods.

Wang Zhe, a senior economist at Caixin Insight Group, said that main macroeconomic indicators in the second quarter showed that the short- term impact of the pandemic on the economy had subsided, and the third quarter will be an important window for a recovery.