Official China PMI Drop to 50 in July

China’s factories hit an unexpected speed bump in July, hiking concerns about slower growth in the world’s second-largest economy.

The government’s official purchasing managers’ index hit 50.0 in July, according to the National Bureau of Statistics, down from 50.2 the previous month. Any number below 50 represents a deceleration in the manufacturing sector.

A separate survey conducted by Chinese media group Caixin and Markit showed manufacturing PMI dropped to 47.8 in July, the lowest level in two years, and the fifth consecutive month the index has fallen below 50.

Poor factory activity is one indicator that the overall health of China’s economy may also be suffering. In a bid to support growth, policymakers have already cut interest rates, and reduced the amount of cash banks are required to keep in reserve. Some infrastructure projects have been accelerated.

Economists at UBS said the government figures — which showed a slowdown in new orders and output — suggest that “the real economy, though stabilizing at a low level, is still struggling to turn around.”

via CNN

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza