The Chinese economy is not in a healthy position, judging by another set of gloomy official activity surveys across the economy for July.
In fact, the results from the surveys conducted by the National Bureau of Statistics suggest the economy may have slowed slightly more in July.
The official manufacturing Purchasing Managers’ Index (PMI) eased to 49.4 last month from 49.5 in June, below a market forecast of 49.3. While the outcome was marginally higher than expected, it is insignificant given that it marks the fifth consecutive month of contraction in factory activity this year and the steepest decline since February.
The survey results indicated that the huge sector was again impacted by weak demand, deflationary pressures, a protracted property slump, and job insecurity, which continue to drag on growth. Most survey indicators worsened, except for a slight uptick in employment, which still remained below the 50 mark separating contraction from expansion.
While output expanded for the fifth month, the gain was the weakest in that period and largely attributed to manufacturers offloading products, such as steel and many chemicals, onto global markets due to sluggish domestic demand. This is likely to contribute to another positive export figure in next week’s foreign trade data.
However, the official non-manufacturing PMI showed a weakening pace of expansion, slowing to 50.2 in July from 50.5 in the previous month, in line with market estimates. Although marking the 19th consecutive month of expansion in the service sector, the latest figure represents the softest pace since last November, amid a sharp decline in new orders and employment. Export orders remained weak, as did selling prices and business confidence.
Retail sales are also expected to be weak.