Accountants, accounting, international, news, articles, membership,

China’s factory activity slips to 15-month low

China’s factory activity slips to 15-month low

China’s factory activity dipped in July as demand contracted for the first time in over a year, falling to a 15-month low.

According to the Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI), activity fell to 50.3 in July from 51.3 in June, the lowest level since April 2020.

China’s economy has recovered well from the severe impact of the pandemic in 2020, but higher raw material costs hit profits growth at industrial firms in June.

The PMI survey showed that firms that export and small manufacturers were the hardest hit.

Wang Zhe, senior economist at Caixin Insight Group, said: “The economy is still facing huge downward pressure. High product prices brought down demand, especially for consumer goods and intermediate goods.”

The research also found that new orders fell for the first time since May 2020, while production declined to the slowest rate of expansion since March last year. Input prices continued to rise, albeit at a slower pace than the previous month, but much faster than output prices, putting pressure on margins.

Export orders grew slightly faster than the month before, but still at a slow pace as the pandemic dampened international demand.