Caixin China manufacturing PMI signals deterioration in biz conditions

The headline seasonally-adjusted PMI, which judges the manufacturing economy, fell from 50.5 in June to 49.2 in July, thereby signalling a deterioration in overall business conditions. Though only marginal, it marked the first PMI reading below 50 for three months.

Firms signalled a marginal fall in production amid a fresh decline in overall new business. Muted foreign demand was a key factor weighing on total sales, with new export orders down noticeably in July.

Subdued market conditions prompted firms to scale back their purchasing activity and trim their staffing levels slightly, Caixin said in a release.

At the same time, cost pressures continued to subside, as average input prices fell for the fourth straight month, which in turn supported a further reduction in selling charges.

Overall business confidence remained below the survey's historical trend.

Companies often commented that relatively sluggish market conditions both at home and overseas had affected customer demand.

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.

Employment across the country’s manufacturing economy fell for the fifth straight month in July. The pace of job shedding eased further from May's recent record, however, and was only mild. Lower payroll numbers were often attributed to reduced sales, but also efforts to cut costs.

After improving in each of the prior five months, supplier performance worsened slightly in July.

Average input costs continued to fall in July. The rate of reduction was the softest seen over the current four-month sequence of decline, however, and only mild.

Fibre2Fashion News Desk (DS)