FX.co ★ China Manufacturing Sector Slips Into Contraction - Caixin

The manufacturing sector in China fell into contraction territory in July, the latest survey from Caixin revealed on Tuesday with a manufacturing PMI score of 49.2.

That's down from 50.5 in June and it moves beneath the boom-or-bust line of 50 that separates expansion from contraction.

Dampening the headline index was a renewed fall in new business received by Chinese goods producers. Though mild, the reduction contrasted with rising sales volumes in the preceding two months. Companies often commented that relatively sluggish market conditions both at home and overseas had impacted customer demand. Notably, new export business contracted at a solid pace that was the fastest since September 2022. Softer demand conditions led manufacturers to cut production for the first time since January, albeit marginally.

Purchasing activity followed an identical trend to output; falling slightly for the first time since the start of the year. Inventories of inputs meanwhile expanded only fractionally, with growth easing from June. Concurrently, stocks of finished goods were accumulated for the first time since October 2022, albeit marginally. Companies that noted an increase in inventories often mentioned that output had exceeded sales.