China’s manufacturing sector contracted for the first time in nine months in July, according to the latest Caixin/S&P Global manufacturing PMI. The index dropped to 49.8 from 51.8 in June, falling short of analysts’ expectations of 51.5. This marks the lowest reading since October of the previous year.
The decline in the Caixin PMI, which primarily reflects the performance of smaller, export-oriented firms, suggests a significant slowdown in manufacturing activity. This contraction comes amidst a broader economic context where China’s growth momentum is increasingly under scrutiny for the second half of 2024.
The official PMI survey, released earlier this week, also reported a dip in manufacturing activity, hitting a five-month low. Both surveys highlight growing concerns about China’s economic outlook, as declining new orders signal potential challenges ahead.
The contraction in manufacturing activity could have wide-ranging implications for China’s economy, which has relied heavily on industrial output and exports as key growth drivers. Analysts will be closely monitoring subsequent economic indicators to assess whether this trend continues and how it might affect China’s overall economic performance and global trade dynamics.
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