China’s manufacturing activity unexpectedly contracted in July. Sporadic outbreaks of the novel coronavirus in mainland China have weighed on the economic recovery.
China’s National Bureau of Statistics released its manufacturing purchasing manager’s index (PMI) in July at 49.0, down from 50.2 in June and below the 50 mark that separates expansion and contraction. The median forecast of economists in a Bloomberg survey was for 50.3.
The nonmanufacturing PMI, which covers construction and services, fell to 53.8 in July from 54.7 in July. It also fell short of the consensus forecast (53.9).
The spread of the new coronavirus has calmed down, and the government has eased measures against it, but areas where infections have been confirmed will again be subject to strengthened measures. Infections are on the rise in the manufacturing hub of Shenzhen, Guangdong Province, raising concerns about disruptions to global supply chains.
China’s gross domestic product (GDP) rose 0.4% year-on-year in the second quarter, the first quarter of 2020, when the coronavirus first broke out in Wuhan, Hubei Province. of low growth. Economists expect China’s economic growth to remain below 4% this year as the pandemic, restrictions and a downturn in the property market continue to weigh on economic activity.
“Manufacturing PMI below 50 shows China’s economic recovery is not yet stable,” Bruce Pang, chief economist at Jones Lang LaSalle (JLL), said on Thursday. “The challenge to GDP growth in the third quarter could be greater than previously assumed.”
Original title:China Factory Activity Sees Shock Contraction on Covid Outbreaks(excerpt)
(Add and update from the 4th paragraph onwards)