Market Overview

China’s factory activity beats expectations

The official manufacturing Purchasing Manager’s Index (PMI) rose to 51.1 in July from June’s 50.9, official data showed on Friday, marking the highest reading since March. Analysts had expected it to slow to 50.7.

New export orders fell although at a slower pace than the previous month, indicating continued pressure on external demand. Companies continued to shed more employees than they hired, although the pace here also moderated. Production rose to a four-month high. A Reuters poll this month has forecast GDP to expand 2.2% in 2020, up from 1.8% projected in the last poll in April, with recently improving data underpinning the more upbeat outlook.

Gauges ranging from trade to producer prices all point to a pick-up in manufacturing, but analysts say factories could have a tough time maintaining momentum as pent-up demand wanes and heavy flooding across large swathes of China disrupts economic activity.

Imports in June rose for the first time since the health crisis hit the economy, as government stimulus stoked demand for commodities, while exports, fueled by medical goods, also rose in a sign the recovery is gaining traction. Profits at China’s large industrial firms also rose at the fastest pace in over a year that month on easing costs and improving demand.

China’s factory activity beats expectations in July and expands for the fifth month, official PMI shows, CNBC, Jul 31

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