The Chinese manufacturing industry has shrunk again in a month.
According to China’s National Bureau of Statistics on the 31st, Chinese manufacturing purchasing manager index (PMI) for July was 49.
The manufacturing PMI, which is prepared based on a survey of corporate officials, is an indicator of economic trends, and if it is above the baseline of 50, it is in the phase of economic expansion and if it is below 50, it is in the phase of economic contraction.
China’s PMI fell below 50 from March to May due to the blockade of Shanghai, China’s “economic capital.”
Reuters said, “With the outbreak of a new virus and the dark global outlook pressing the manufacturing industry, China’s manufacturing economy contracted unexpectedly a month after it turned to an expansion phase,” adding, “This is below expert expectations of 50.4.”
Non-manufacturing PMI, which reflects service industry trends, was also 53.8, down from 54.7 in the previous month.
Zhao Qinghe, an analyst at the National Bureau of Statistics, pointed out, “Overall, China’s economic sentiment has fallen somewhat, and the foundation for recovery must still be solid.”
He explained that the reasons for the decline in manufacturing PMI in July were various, including the off-season of production, insufficient market demand, and poor sentiment in industries with high energy consumption.
He also pointed out that the proportion of companies that reported a lack of market demand rose for four consecutive months, accounting for more than 50% in July.
He said, “The main difficulty facing the manufacturing industry is insufficient market demand and the foundation of the manufacturing recovery must be solidified.”
He added, “The internal and external environment of Chinese economic development has become more complex and severe, and companies’ production and operation are under constant pressure and market expectations are affected to some extent.”