China factory activity sees shock contraction on Covid-19 outbreaks
Sign up now: Get ST's newsletters delivered to your inbox
China's official manufacturing purchasing managers index fell to 49 in July, from 50.2 in June.
PHOTO: AFP
Follow topic:
BEIJING (BLOOMBERG) - China's factory activity unexpectedly contracted in July, reversing earlier economic momentum as sporadic Covid-19 outbreaks weighed on the recovery.
The official manufacturing purchasing managers' index fell to 49 from 50.2 in June, the National Bureau of Statistics said on Sunday (July 31). Economists had expected a reading of 50.3, according to the median estimate in a Bloomberg survey of economists.
A reading above 50 indicates expansion from the previous month, while anything below that indicates contraction.
The non-manufacturing gauge, which measures activity in the construction and services sectors, decreased to 53.8 from 54.7 in the previous month.
That was below the consensus forecast of 53.9. China's economic recovery has been fragile as the government relaxes curbs with easing outbreaks, but then tightens them again wherever the virus pops back up.
A flare-up in the southern manufacturing hub of Shenzhen impacted factory operations there, raising concerns about disruptions to global supply chains.
China's economy in the second quarter grew at the slowest pace since the initial outbreak in Wuhan, and economists expect full-year growth could reach just 4 per cent or below as virus outbreaks and restrictions, as well as an ongoing slump in the property market, continue to weigh on activity.
"The manufacturing purchasing managers' index being under 50 shows China's economic recovery is unstable yet," Jones Lang LaSalle chief economist Bruce Pang said on Sunday. "The challenges to China's gross domestic product growth in the third quarter could be bigger than expected earlier."
