ALBAWABA – The sluggish economic recovery in China has seen marginal, albeit better than expected, improvement on the purchasing managers’ index (PMI) in July, according to official data released Monday.
China’s manufacturing PMI came in at 49.3 in July, compared with 49.0 in June, 48.8 in May and 49.2 in April, as per data issued by the National Bureau of Statistics.
July’s manufacturing PMI was slightly better than the 49.2 median forecast in a recent Reuters poll.
However, China’s non-manufacturing PMI reading for July, came in at 51.5. Down from with 53.2 in June, 54.5 in May and 56.4 in April, official data showed.
Notably, PMI readings above 50 indicate expansion and growth, whereas readings below 50 reflect contraction in the respective economic sector.
These PMI readings point to the sluggish economic recovery in China running on fumes, with consistent decline in the non-manufacturing sector, and barely a nudge upwards in manufacturing activity.
Employment still low on sluggish economic recovery in China
“China’s manufacturing PMI rebounded to 49.3 percent this month, senior NBS official Zhao Qinghe wrote in a statement that was released with the bureau’s data.
However, “some enterprises in the survey reported that the current external environment is complicated and severe, overseas orders have decreased, and insufficient demand is still the main difficulty facing enterprises,” Zhao said.
Employment sub-indexes for both manufacturing and non-manufacturing sectors declined in July, pointing to lingering softness as youth unemployment hit successive record highs in China, according to CNBC News.
A major sector that hires young workers, the service industry sub-index slowed 1.3 percentage points in July from the previous month, as per the NBS data.
“Downward pressure on manufacturing eased slightly. But this was more than outweighed by a sharp deceleration in construction and cooling services activity,” Julian Evans-Pritchard, head of China at Capital Economics, told CNBC News.
“Policy support should drive a turnaround later this year. But with officials taking a restrained approach to stimulus, any reacceleration in growth is likely to be modest,” he added.
Stimulus to boost sluggish economic recovery in China
Investors are looking beyond the PMI weakness to potential economic support from the government, according to Bloomberg.
The government promised stimulus to boost consumption, having on Friday announced a raft of steps to help industries involved in home goods, food, plastic products, leather and other sectors.
More policy details may come later Monday at a briefing held by the National Development and Reform Commission and other ministries, the New York-based news agency reported.
Concerns about the sluggish economic recovery in China have been mounting recently, with early indicators for July showing a weakening of momentum.
Economists polled by Bloomberg projected growth at 5.2 percent for 2023, lower than earlier forecasts and more in line with the official government target of around 5 percent.
