China's Factory Output Is Starting To Pick Up

Chinese flash manufacturing PMI climbed to a five-month high of 49.5 in July.

While the overall reading remained below 50 which signals contraction, the change in direction is a positive sign. Employment however contracted at a faster rate in July. With low inflation Beijing does have room to support growth.

But this is unlikely to result in a massive stimulus since Beijing is more concerned with employment growth than GDP growth, and China doesn’t need that much growth for job creation.

A summary of the report shows that output expanded, while new orders and new export orders contracted but at a slower rate.

china july flash pmi

Photo: Markit Economics



China hsbc flash pmi chart july

Photo: Markit Economics


Chinese flash PMI hit a seven-month lowin June, declining to 48.1.

After two interest rate cuts and Beijing’s push to stabilise economic growth investors are watching to see if manufacturing contracts further.

The flash number focuses more heavily on small-and-medium enterprises (SMEs) than the official index.

Don’t Miss: SocGen’s Presentation On The Slowing State Of The Chinese Economy >

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