THE country’s factory activity probably grew for the fifth month in July, but at a slower pace, as floods disrupted manufacturing and a resurgence in coronavirus cases around the world threatens to undermine the gradual domestic recovery.

The official manufacturing Purchasing Manager’s Index (PMI) is expected to ease to 50.7 in July from June’s three-month high of 50.9, according to the median forecast of 29 economists. The survey is due to be released Friday.

Gauges ranging from trade to producer prices have all reflected signs of a further pickup in manufacturing, but analysts say factories could have a tough time maintaining momentum as pentup demand wanes and heavy flooding disrupts economic activity.

“The water level of areas along the lower reaches of the Yangtze River remain at alarming levels, weighing on production and demand in these regions, including the Yangtze River Delta, which is China’s industrial and commercial heartland,” said analysts from Nomura.

Imports in June rose for the first time since the health crisis hit the economy, as government stimulus stoked demand for commodities, while exports, fuelled by medical goods, also rose in a sign the recovery is gaining traction.

Profits at China’s large industrial firms also rose at the fastest pace in over a year that month on easing costs and improving demand.(SD-Agencies)