Manufacturing PMI slips as heavy flooding dents output

08/30/16

Permalink 12:12:27 pm, by dacare, 333 words, 339 views   English (US)
Categories: Manufacturing & Industry

Manufacturing PMI slips as heavy flooding dents output


CHINA’S manufacturing sector weakened in July as heavy floods hit output, but private manufacturers did better than market expectations to record their first activity growth in 17 months, data showed yesterday.

The manufacturing Purchasing Managers’ Index fell to 49.9 last month, below June’s 50, according to the National Bureau of Statistics and the China Federation of Logistics and Purchasing.

The weaker pace of manufacturing growth reflected the impact from the recent massive floods along the Yangtze River Economic Belt, Australia and New Zealand Banking Group said in a research note yesterday.

It added that industrial production will be sluggish in the near term as the area’s output has been disrupted.

Factory output fell to 52.1 in July from 52.5 in June, and total new orders hovered just inside the expansionary territory at 50.4, but a dip from June’s 50.5, the PMI showed.

Meanwhile, the Caixin China General Manufacturing PMI, which reflects private and export-oriented manufacturing conditions, rose to 50.6, a better-than-expected performance and was up significantly by 2 points from its June reading.

This was the first growth in activities since February 2015, with sub-indexes of output, new orders and inventory all surging past the 50-point mark that separates growth from decline.

“The Chinese economy has begun to show signs of stability due to the gradual implementation of proactive fiscal policies,” Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group, said in a note after the PMI report. China said last week that industrial profits rose at the fastest pace in three months in June, though gains were seen in electronics, steel and oil processing.

Economic data for the second quarter were slightly stronger than expected due to a housing boom and government infrastructure spending that boosted demand for materials from cement to steel.

“But the pressure on economic growth remains,” Zhong warned.

Analysts also viewed that July’s data “do not bode well for GDP growth” in the second half of this year, as the real estate sector which fueled growth in the first half may have peaked.

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