China’s manufacturing sector saw a deterioration in operating conditions in July, according to latest PMI data. A softening of new business growth led manufacturers to scale back production for the second time in three months. The slowdown in sales coincided with a steeper contraction in new export orders.
Lower production led companies to trim their headcounts again in July. That said, purchasing activity rose slightly as optimism about output in the year ahead improved.
Average input prices meanwhile increased for the first time in five months. Firms nevertheless lowered their selling prices again as competition for new business intensified.
The headline seasonally adjusted Purchasing Managers’ Index (PMI) posted 49.5 in July, down from 50.4 in June. Falling below the 50.0 no-change threshold in July, the latest figure signalled that manufacturing sector conditions deteriorated at the start of the third quarter, albeit only marginally. This was the second deterioration in three months.
After rising in June, manufacturing output declined during July. Indeed, new order growth slowed since June, with sales rising only fractionally overall. A combination of falling production and stable backlogs prompted Chinese manufacturers to lower their headcounts in July.
A combination of falling production and stable backlogs prompted Chinese manufacturers to lower their headcounts in July. At the same time, purchasing activity expanded in July after falling over the prior two months.
Finally, supply chain conditions continued to deteriorate in July, as Chinese manufacturers faced shipment delays and supplier shortages.