[Caixin.com](Reporter Cheng Siwei)China’s manufacturing industry continued to expand in July, but the expansion momentum further slowed down. The Caixin China Manufacturing PMI (Purchasing Managers Index) for July 2021 announced on August 2 fell 1 percentage point to 50.3, the lowest since May 2020.
This trend is consistent with the manufacturing PMI of the National Bureau of Statistics. The manufacturing PMI in July announced by the Bureau of Statistics was 50.4, a decrease of 0.5 percentage point from June and the lowest since March 2020.
Manufacturing supply continued to expand in July, but the rate of expansion was only weak, and demand contracted for the first time in more than a year. In July, the manufacturing production index and the new order index recorded their lowest levels in 16 months and 15 months, respectively. Some companies interviewed reported that customer demand was relatively weak; others reported that the increase in product ex-factory prices inhibited sales. Sub-category data shows that new orders for investment products have grown strongly, but new orders for consumer products and intermediate products have decreased.
The overall external demand remained stable. In July, the manufacturing new export order index was slightly higher than the decline line. The epidemic situation in different overseas regions was divergent, and the impact on exports fluctuates from one to the other.
The job market has not changed much. The manufacturing employment index in July was slightly higher than the rise and fall line, and was in the expansion range for the fourth consecutive month. Some companies increase the use of labor to expand production capacity, while others are relatively cautious. With the stability of the job market, the number of backlogs increased slightly.
Both the manufacturing purchase price index and the ex-factory price index fell, indicating that inflationary pressures eased slightly in July. However, the purchase price index has been above the rise and fall line by more than 5 percentage points for eight consecutive months. The surveyed companies indicated that the prices of raw materials remain high, especially the high prices of industrial metals. In contrast, the ex-factory price index is only slightly higher than the rise and fall line, and recorded a new low since October 2020, indicating that market demand is more sensitive to product prices and restricting the pricing power of enterprises.
Affected by local floods, epidemics, and shortages of products such as chips, logistics delivery time continued to extend, and the supplier supply time index in July continued to be in the contraction range. As the price of raw materials is still at a high level, the purchasing volume of manufacturing companies only increased slightly, and the raw material inventory index fell in the contraction range. Enterprises continue to use finished goods inventory to deliver orders, and the finished goods inventory index continues to be in a contraction range, but the range has narrowed slightly.
The Chinese manufacturing industry is generally optimistic about the growth prospects for the next year, but the optimism has fallen to a 15-month low. Companies are worried about when the global epidemic will be controlled, and the supply chain will continue to be disrupted.
According to Wang Zhe, senior economist at the Caixin Think Tank, the marginal slowdown of manufacturing expansion in July, market supply continued to expand, demand began to come under pressure, and companies were cautious in increasing employees and purchasing raw materials. Inflationary pressures have been partially eased, and manufacturing entrepreneurs remain optimistic about the future, but it has fallen below the long-term average. According to data from Caixin China’s manufacturing PMI in July, the current foundation for the recovery of the national economy is not stable, the downward pressure on the economy is still relatively large, and the confidence of entrepreneurs also needs to be protected.
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