Posted on 02 Aug 2022
For July, China's Purchasing Managers' Index (PMI) for the country's manufacturing industry retreated from a two-month rise by 1.2 percentage points on month to 49, or back into contraction again after reaching above the threshold of 50 in June, according to the new release by China's National Bureau of Statistics (NBS).
The July PMI was dragged down mainly due to the fact that July is a traditional off-season for the manufacturing industry, and also because of the underperformance of energy-intensive sectors and weak demand for manufactured goods, Zhao Qinghe, NBS' senior statistician was quoted highlighting in the report.
Specifically, PMI for oil, coal and other fuel processing, and ferrous smelting and fabrication sectors – all continued to remain in the contraction zone and was noticeably lower than the manufacturing industry's PMI – also partly resulting in the fall-off in the overall PMI, Zhao pointed out. Nevertheless, 10 out of the 21 surveyed sectors still saw their PMI above 50 last month.
Both supply and demand for the manufacturing industry weakened after the fast growth in June, with the sub-index for production down by 3 percentage points on month to 49.8, and that for new orders slipped to 48.5 after the on-month dip of 1.9 percentage points.
Meanwhile, NBS' survey also indicated that more than half of the sampled industrial firms witnessed slack demand from buyers last month, and the proportion of the total marked the fourth consecutive month of rise. "These enterprises were facing great difficulties given low demand," Zhao highlighted.
The price indices for raw materials procurement and finished products ex-works continued declining last month, with the former slumping by 11.6 percentage points on month to 40.4, and the latter down by 6.2 percentage points on month to 40.1, both of which reflected the fluctuation in bulk commodities prices including oil, coal and iron ore.
In particular, Chinese ferrous smelting and fabrication sectors posted the lowest price indices among all the surveyed sectors, according to Zhao.
Consequently, the sub-index for procurement volume in the industry dropped by 2.2 percentage points on month to 48.9, as some enterprises became less interested in buying and opted to stand on the sidelines instead after noting the volatility in prices.
As many Chinese manufacturers operated amid complex internal and external challenges, the sentiment index for production and business operations was 3.2 percentage points lower on month to stand at 52, or still in the expansion area, but that for ferrous smelting and fabrication sectors had remained below the threshold of 50 for the fourth month.
In July, China's PMI for the non-manufacturing sector dipped by 0.9 percentage points on month to 53.8 after two months of gains, while among all, the sub-index for business activities in the country's construction sector climbed by 2.6 percentage points on month to 59.2, indicating a modest improvement in the sector, according to NBS.
Source:Mysteel Global
