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August 2, 2021

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PMI slows but expands in extreme July weather

China’s manufacturing activity continued to expand in July as its economic recovery sustained momentum, official data showed on Saturday.

The purchasing managers’ index for China’s manufacturing sector came in at 50.4 in July, edging down from 50.9 in June, data from the National Bureau of Statistics showed.

A reading above 50 indicates expansion, while a reading below reflects contraction.

The growth of China’s factory activity slowed in July, but the PMI reading of most industries remained in the expansion zone, NBS senior statistician Zhao Qinghe said, attributing the slowdown to factory equipment maintenance and extreme weather, including high temperatures and floods.

The country has experienced unusual extreme weather in July. Torrential rain in Henan Province and Typhoon In-Fa in the eastern coastal areas have disrupted normal production and transportation, causing damage in the country and triggering emergency responses.

The sub-index for production stood at 51 in July, down 0.9 percentage points from a month earlier, while that for new orders dipped 0.6 percentage points to 50.9, a sign of slowing production and market demand in the manufacturing sector.

The new export order and import sub-indexes decreased to 47.7 and 49.4, respectively.

Saturday’s data also showed that the PMI for the non-manufacturing sector came in at 53.3 in July, down from 53.5 in June.

The sub-index for business activities in the services sector stood at 52.5, up from 52.3 in June. The reading reflected a steady recovery in the services sector, fueled by increasing summer consumption and other factors, said Zhao.

The sub-index tracking business activity expectations for the services sector hit 60.1, remaining above 60 for six consecutive months, showing most services enterprises were optimistic about market prospects in the near term.

Affected by adverse weather conditions, the growth of construction activities in the country slowed, with the sub-index for business activities dipping to 57.5 in July from 60.1 a month earlier.

Wen Tao, an analyst with the China Logistics Information Center, said in the second half, domestic demand will be unleashed at a faster pace, which is expected to boost market supply and demand, optimize the industrial structure and create more job opportunities.


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