October 28, 2020

Caixin/Markit Purchasing Managers’ Index for July 2020

Results of a private survey on Monday showed China’s manufacturing activity expanded for the month of July, with output and total new orders both hitting their highest levels since January 2011.

The Caixin/Markit manufacturing Purchasing Managers’ Index (PMI) came in at 52.8 for July, marking its third straight month of expansion.

“As production and demand expanded, measures for purchases and stocks of purchased items both remained strong,” said Wang Zhe, senior economist at Caixin Insight Group.

Economists polled by Reuters expected Caixin/Markit manufacturing PMI to come in at 51.3 for July as compared to 51.2 for June.

PMI readings above 50 indicate expansion, while those below that signal contraction. PMI readings are sequential and indicate on-month expansion or contraction.

China’s manufacturing sector has been battered as factories were shut earlier in the year due to large-scale lockdowns to contain the coronavirus pandemic.

Demand was also hit as the virus spread globally. The gauge for new export orders remained in contractionary territory for the seventh consecutive month in July.

“Although the pace of the contraction slowed, overseas demand remained a drag on overall demand,” Wang wrote in a report.

While recently there was some resurgence of the virus in parts of China, supply and demand both improved, he added.

“Overall, flare-ups of the epidemic in some regions did not hurt the improving trend of the manufacturing economy, which continued to recover as more epidemic control measures were lifted,” said Wang.

However, employment remained weak in July, he said.

On Friday, China reported official PMI that came in at 51.1 in July as compared to 50.9 in June, beating economists’ forecasts of 50.7. The expansion in China’s official PMI for the fifth straight month was due to demand for electrical and pharmaceutical goods.

The official PMI survey typically polls a large proportion of big businesses and state-owned companies. The private Caixin and IHS Markit survey features a bigger mix of small- and medium-sized firms.

This is a developing story. Please check back for more updates.

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