Official data shows that China’s Manufacturing Purchasing Managers Index (PMI) in July fell below the expansion-contraction line for the first time in five months, signaling a slowdown in economic growth.
The data released on Friday (July 31) by China’s National Bureau of Statistics indicated that the manufacturing PMI in July was 49.2, down by 1.1 percentage points from the previous month, lower than the median forecasts of Bloomberg (50.1) and Reuters (50.0).
The data also showed that China’s non-manufacturing business activity index and composite PMI output index in July were also below the expansion-contraction line. The non-manufacturing business activity index was 49.0, down 1.2 percentage points from the previous month, the lowest level since November 2022. The composite PMI output index was 49.3%, down 1.3 percentage points from the previous month.
These figures indicate that China’s economic weakness has become even more entrenched, as weak domestic demand has overshadowed the still-resilient support from exports.
After the Chinese government reduced spending on infrastructure in recent months, investors are increasingly watching to see whether policymakers will introduce new stimulus measures to stabilize the economy.
Official data released in mid-July showed that China's GDP growth rate in the second quarter was below the 5% seen in the first quarter and also fell short of the 4.5% forecast in Bloomberg and Reuters surveys. According to Reuters statistics, this is the lowest quarterly year-on-year growth rate since the fourth quarter of 2022.
The Chinese Communist Party’s Politburo held a meeting on Thursday (July 30) to analyze and study the economic situation, emphasizing the need to pay close attention to the difficulties and challenges facing the economic operation and to maintain firm confidence.
Regarding economic work for the second half of the year, the meeting proposed the timely rollout of pragmatic and effective incremental policies, increasing efforts to expand domestic demand, optimizing supply, vigorously developing service trade, and promoting balanced development of trade.