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China PMI July 2023

China: Manufacturing PMI rises in July; non-manufacturing PMI slips

The National Bureau of Statistics’ Manufacturing Purchasing Managers’ Index (PMI) rose to 49.3 in July from June’s 49.0. As such, the index remained below the 50.0 no-change threshold, signaling a continued deterioration in manufacturing sector operating conditions from the previous month. The reading was largely due to a softer decline in new orders.

The National Bureau of Statistics’ non-Manufacturing PMI stood at 51.5 in July, down from June’s 53.2 and marking the fourth straight monthly decline. Weaker activity in both services and construction drove the slowdown, and both new orders and export orders declined at faster rates. Trade tensions with the West, soft external demand, depressed domestic sentiment and a weak property sector are all holding back the economy.

On the near-term outlook, Nomura analysts said:

“Looking forward, we expect the manufacturing PMI to remain sluggish in August, while non-manufacturing PMIs could weaken further. Of note, the new orders PMI indices for services and construction sectors dipped further into contractionary territory in July […] pointing to continued weakness in coming months.”

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