ACTIVITY in China’s manufacturing sector remained in contraction territory for the third consecutive month in July, data from the National Bureau of Statistics (NBS) showed yesterday.

The manufacturing purchasing managers’ index (PMI) came in at 49.4 this month, compared with 49.5% in both June and May.

A reading below 50 indicates contraction. The PMI of large-scale enterprises came in at 50.5%, edging up 0.4 percentage points compared with the previous month, while the PMI of small- and medium-sized enterprises came in at 46.7% and 49.4% respectively, 0.7 and 0.4 percentage points down from the previous month.

The new orders sub-index inched down to 49.3 from 49.5 in July from the previous month, indicating shrinking manufacturing demand. The production sub-index fell to 50.1 from 50.6 but remained above the threshold, showing that companies continued to expand their production.

The manufacturing PMI mainly declined because of the production off-season, insufficient market demand, and extreme weather, such as high temperatures and floods, said Zhao Qinghe, a senior statistician at the NBS.

The sub-index for expectations on production and operations plunged to 53.1 this month from 54.4 in June, indicating that most manufacturing enterprises remained optimistic about the recent market developments.

The non-manufacturing PMI dipped to 50.2 in July from 50.5 the month before, the NBS data also showed. The expansion in the non-manufacturing sector continued to shrink but remained in expansion territory for the 19th month in a row.

The service sector’s business activity index fell to 50 from 50.2 in the period, indicating a decline in confidence in the service sector.

The business activity indexes for the retail, capital market services, real estate, and other industries were lower than 47 this month, showing weakness, Zhao noted.

The construction activity sub-index plunged to 51.2% from 53.3 in July from June. The decline was mainly due to unfavorable factors, such as high temperatures, heavy rains, and floods, according to Zhao.

The non-manufacturing sub-index for expectations on business activity dropped to 56.6 from 57.6, indicating that service enterprises remained fairly optimistic about market development.

The composite PMI output index, which is the weighted sum of the manufacturing production sub-index and the non-manufacturing PMI, fell to 50.2 in July from 50.5 the previous month. This shows that the expansion of production and operation of Chinese enterprises has slowed down slightly.

(SD News)