China’s economy continued strong recovery from coronavirus shock in July, but challenges remain

China’s economy continued strong recovery from coronavirus shock in July, but challenges remain

  • The official manufacturing purchasing managers’ index (PMI) was 51.1 for July, with a reading above 50.0 signifying growth in factory output
  • Non-manufacturing PMI was 54.2, with both surveys now reporting positive outlooks for five consecutive months

Buoyed by a construction boom, China’s economic recovery continued apace in July, new sentiment data suggested.

The official manufacturing purchasing managers’ index (PMI) for July stood at 51.1, with a reading above 50.0 suggesting expansion in factory output.This was slightly better than June’s reading of 50.9 and was better than analysts’ expectations, with the median result of a Bloomberg survey standing at 50.8.

The PMI is a sentiment gauge, conducted through a survey of factory owners and purchasing managers. It offers an early snapshot of the state of China’s economy during the month ahead, quizzing operators on issues like hiring, export orders and inventory.

The official non-manufacturing PMI, also released by the National Bureau of Statistics (NBS) on Friday, was 54.2 for July, down from 54.4 in June but slightly below analysts’ expectations of 54.5. This survey takes the mood among the services and construction sectors. In the construction sector, sparked by a building boom, sentiment rose to 60.5 from 59.8 in June, while in services it edged down slightly to 53.1 from 53.4.