Manufacturing activity hit 2-year low in July
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E-mail Shanghai Daily, August 4, 2015
Manufacturing activity in China has dropped to the lowest level in two years in July, due to declined output and fewer orders, a survey unveiled.
The Caixin General China Manufacturing Purchasing Managers' Index (PMI) slumped from 49.4 in June to 47.8 in July, the lowest since July 2013.
The final reading is worse than the preliminary reading of 48.2 and marks the fifth consecutive month of decline in the sector.
A reading above 50 indicates expansion, while a reading below that represents contraction.
According to the survey, July's reduction in manufacturing output was the sharpest since November 2011 because of weaker market conditions and a downturn in demand.
Meanwhile, fewer new orders underpinned a renewed contraction of purchasing activity last month, leaving the rate of reduction in new orders the sharpest seen in the past three-and-a-half years.
"Weak domestic demand remained the main drag on manufacturing industries," said Qu Hongbin, chief economist at HSBC China.
"It reveals a vulnerable economy behind the robust financial market, and manufacturers are still deep in trouble," he said.
The economic slowdown might continue into the second half of the year, and require more stimulus measures, he said.
This is the first time the index has been released since it was renamed after Caixin Media Co., Ltd. replaced HSBC as sponsor of Markit's China PMI. HSBC held the sponsorship for five years, and CLSA sponsored the Markit China PMI prior to HSBC.
China's official PMI, which measures activity among large-scale state-owned firms, stood at 50.0 in July, down from 50.2 in June, according to data released Saturday by the National Bureau of Statistics.
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