BEIJING (Reuters) – China’s manufacturing activity, which rebounded in June after COVID-19 lockdowns were lifted, contracted unexpectedly in July on renewed health fears amid heightened pessimism as for the economic outlook, shows the official Chinese PMI index published on Sunday.
The National Bureau of Statistics’ manufacturing PMI index fell to 49.0 in July from 50.2 the previous month, below the 50 threshold separating contraction from expansion in activity.
Analysts polled by Reuters expected an improvement, to 50.4.
“The level of economic prosperity in China has declined, the fundamentals of the recovery still need consolidation,” said SNB statistician Zhao Qinghe in a statement posted on the institution’s website.
One of the main factors behind this relapse is the continued contraction of activity in the oil, coal and foundry sectors.
The index is the weakest of the last three months. The production, new orders and employment sub-indices are all below 50.
Manufacturing continues to face high commodity prices, which squeeze profit margins, while export prospects are weak due to global recession fears.
This weakness in demand is hampering the recovery, notes Bruce Pang, chief economist at Jones Lang Lasalle Inc, in a research note: “Q3 growth could face greater challenges than expected, as the recovery is slow and fragile. “
(Beijing Office, French version Jean-Stéphane Brosse)
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