Decline in new orders in July leads to Purchasing Managers’ Index (PMI) level of 47.7, compared to 48.2 in June.
BBC News has reported on the continuing decline in China’s manufacturing activity, with the month of July seeing the industry slow to its lowest level in almost a year.
As the country’s economic growth was reported to have slowed in April to June of this year, indicating the second consecutive quarter of weak expansion, the continued decline in manufacturing activity is set to worsen the problem, with the manufacturing and export sectors acting as key drivers of China’s growth over the last few decades.
July also marked China’s fourth consecutive month of recording a PMI reading below 50, which shows contraction rather than growth. It is thought that the reduction in exports is due to slowing demand from key markets such as the US and Europe as a result of poor economic growth. Furthermore, the article states that “policymakers have found it tough to boost domestic consumption enough to offset the decline in foreign sales”.
Zhiwei Zhang, an economist with Nomura, commented: “The fall in the index is in line with our view of growth momentum fading further in the coming quarters.” He added that China’s growth is expected to slow to an annual rate of 7.4 percent in the current quarter and 7.2 percent in 4Q13.
The Recycler has reported on China’s slowing manufacturing activity this year in both April and May; although in November 2012 manufacturing activity was reported to have grown for the first time in 13 months, with a PMI level of 50.4. Chinese exports have also fallen in July for the first time in 17 months.