China’s factory activity unexpectedly contracted in July amid COVID outbreak According to Reuters
© Reuters. FILE PHOTO: Employees work on the production line of vehicle parts during a government-organized media tour of the factory of German engineering group Voith, following the outbreak of the coronavirus disease (COVID-19) ), in Shanghai, China July 21, 2022. REU
BEIJING (Reuters) – China’s factory activity unexpectedly fell in July after recovering from last month’s COVID-19 lockdown, as a new virus outbreak and dark global outlook weighed on demand, an official survey showed Sunday.
The National Bureau of Statistics (NBS) put the official purchasing managers’ index (PMI) at 49 in July, down from 50.2 in June, the National Bureau of Statistics (NBS) said today. Sunday.
Analysts polled by Reuters had expected it to improve to 50.4, a slight improvement but still above the 50-point mark, barring a contraction to monthly growth.
The official non-manufacturing PMI in July fell to 53.8 from 54.7 in June. The official composite PMI, which includes manufacturing and services activity, was at 52.5 versus 54. ,first.
China’s economy almost shrank in the second quarter amid widespread shutdowns, but top leaders have recently signaled that a strict no-COVID policy will remain a priority.
Policymakers are set to miss a GDP target of “about 5.5%” for this year, state media reported after a high-level meeting of the ruling Communist Party.
Beijing’s decision to refuse to mention its growth target after the meeting sparked speculation that it would deploy massive stimulus measures, as has often been done during previous recessions.
Capital Economics says that restrictive policy, coupled with the continued threat of more lockdowns and weak consumer confidence, is likely to make China’s economic recovery more difficult.
After recovering in June, the recovery in the world’s second-largest economy faltered as new COVID outbreaks led to a tightening of activities in some cities, while markets mighty real estate has wobbled from crisis to crisis.
Chinese manufacturers are also struggling with high raw material prices that are denting profit margins and export prospects clouded by fears of a global recession.
China’s southern megacity of Shenzhen has vowed to “mobilize all resources” to curb the slowly spreading COVID-19 outbreak, ordering strict implementation of testing and temperature checks, and Lock the doors of buildings affected by COVID.
Earlier this month, the port city of Tianjin, home to factories affiliated with Boeing (NYSE:) and Volkswagen (ETR:), and other regions, tightened curbs to combat new outbreaks.
According to World Economics, the lockdown measures had some impact on 41% of Chinese companies in July, although their manufacturing business confidence index rose significantly from 50.2 in June to 51.7 in July.