China’s factory activity unexpectedly slips into contraction in July
Summary
China’s factory activity shrank in July for the first time in five months, signaling slower growth in the country’s economy. The official measure of manufacturing activity dropped below 50, which means production is contracting rather than expanding.Key Facts
- China’s manufacturing purchasing managers index (PMI) fell to 49.2 in July from 50.3 in June.
- A PMI below 50 shows a contraction in factory activity; above 50 means growth.
- New orders fell sharply to 48.5, the lowest since 2023.
- Production also decreased, with the index dropping to 49.9 from 51.4.
- Domestic demand and building activities have weakened, partly due to typhoons hitting China in July.
- China’s economy grew by 4.3% in the April-June quarter, the slowest in over three years.
- Exports, especially in technology products like semiconductors and electric vehicles, remain strong and help support growth.
- Some countries have criticized China for excess industrial capacity and cheap exports, but China disputes these claims.
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