China: Manufacturing activity unexpectedly contracted in July

Manufacturing activity in China shrank sharply in July after recovering from COVID-19 lockdowns a month earlier, as fresh outbreaks of the coronavirus and a worsening global outlook weighed on demand, according to a survey released today.

The official Purchasing Managers’ Index (PMI) fell to 49.0 in July from 50.2 in June, below the 50-point mark that separates growth from contraction, according to the National Bureau of Statistics (NBS). Analysts polled by Reuters had expected a rise to 50.4 points.

“The level of economic prosperity in China has declined, the foundations of recovery still need strengthening,” Zhao Qingge, a senior NBS official, said in a statement.

The index’s performance was the weakest in three months, with output, new orders and employment sub-indices also falling.