New Delhi, Aug 1 (IANS) China’s factory activity unexpectedly slipped into contraction in July for the first time since February as weak domestic demand and weather-related disruptions weighed on production, increasing pressure on policymakers to roll out additional measures to support the economy, according to a report.
According to CNBC’s analysis, the official manufacturing Purchasing Managers’ Index (PMI) fell to 49.2 in July from 50.3 in June.
A reading below the 50-mark indicates contraction in manufacturing activity.
The latest reading also came in below market expectations and marked the weakest factory activity since February, ending a four-month period of expansion that had been supported by exporters accelerating shipments ahead of higher US tariffs.
Moreover, the slowdown was driven primarily by weaker domestic demand with the sub-index for new orders falling to 48.5, its lowest level in more than three years.
Export orders also softened during the month, indicating easing external demand after a period of front-loaded shipments.
Beyond manufacturing, economic activity also weakened across other sectors.
China’s construction PMI dropped to a record low, while the services sector expanded at its slowest pace since the initial Covid-19 lockdowns.
The composite PMI — which combines manufacturing and non-manufacturing activity –also slipped below the 50-point threshold, reflecting a broader slowdown in business activity.
Additionally, Chinese authorities partly attributed the weaker readings to typhoons that disrupted factory operations and construction projects in several regions during July.
The data comes a day after China’s top policymakers acknowledged growing challenges facing the economy and pledged to accelerate fiscal spending and introduce additional policy measures to support growth in the second half of the year.
–IANS
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