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REPEAT: China CFLP July Mfg PMI Eases as New Orders Slow Down

Repeats Story Initially Transmitted at 03:12 GMT Jul 31/23:12 EST Jul 30
--Mfg PMI Above 50 For 12th Consecutive Month
--Services PMI Falls to 54.5 from 54.9 in June
     BEIJING (MNI) - PMI data released Friday by the China Federation of
Logistics and Purchasing:
      Manufacturing PMI  Services PMI
-------------------------------------
June               51.4          54.5
May                51.7          54.9
     Note: Readings above 50 indicate expansion in the sector, while readings
below 50 signal contraction. The higher the PMI reading above 50, the faster the
expansion in the sector. The lower the reading below 50, the faster the
contraction.
     FACTORS:
     --Manufacturing new orders index fell to 52.8 in July from 53.1 in June
     --Manufacturing output index fell to 53.5 in July from 54.4 in June
     --Input price index rose to 57.9 in July from 50.4 in June
     --Business expectations index rose to 59.1 in July from 58.7 in June
     --New export orders fell to 50.9 in July from 52.0 in June
     TAKEAWAYS: The official China manufacturing purchasing managers index
(PMI), jointly released by the China Federation of Logistics and Purchasing
(CFLP) and the National Bureau of Statistics, fell to 51.4 in July from 51.7 in
June. The July reading was the first fall since April  this year. 
     The services PMI also fell in July, to 54.5 from 54.9 from in June, the
tenth consecutive month that the reading has been above the 54 mark, a
relatively strong reading, the CFLP/NBS data show.
     The slowdown in the July manufacturing PMI was unexpected, with the median
forecast of an MNI survey showing a median for the index to ease back to 51.5.
The July reading was the 12th consecutive month manufacturing sentiment has been
above the 50-point mark, which divides expansion from contraction. And this was
also the 10th consecutive month that the index has been above the 51-point
market. 
     The main dragging force was foreign demand. The new export ordera fell 1.1
percentages to 50.9, compared with the strong reading of 52.0 in June.
     The July index indicated "imports and exports maintained growth in July,
but the pace has slowed down," Zhao Qinghe, an analyst with the National Bureau
of Statistics, said in the statement. 
     Production sentiment also showed a weak increase. The production index fell
to 53.5 from 54.4 in June.
     The index of overall new order edged down to 52.8 from the previous 53.1. 
     "The constant hot weather and flood disasters in certain regions
contributed the slowdown of production," Zhao said, adding "the gap between
output and input was gradually narrowed, indicating the relationship between
supply and demand is improving. "
     Manufacturers continued to increase raw material purchases, so the output
price and raw material purchasing price both bounced up. The input price jumped
to 57.9, the highest since this March when it recorded at 53.4, while the output
rose to 52.7 from the previous 49.1, according to the statement of NBS.
     Chen Zhongtao, economist with the CFLP, said "the gap between the input and
output price will raise costs and reduce profits of the downstream
manufacturers, which will harm the stability of the economy."
     Among the five main sub-indexes that make up the main PMI index, raw
material inventories and employment were below 50, the point that separates
expansion from contractin.
     The raw material inventories fell to 48.5 from 48.6 in June as the
manufacturers continued to cut inventories, while employment 49.2 from the
previous 49.0
     By enterprise size, business activity among big manufacturers improved,
with the index rising to 52.9, up 0.2 percentage points from June. However,
sentiment among medium- and small-size manufacturers declined, though the index
remained above 50, NBS Zhao said.
     High-technology and equipment manufacturing contracted in July, but their
PMI was still over one point higher than the total manufacturing PMI.
     However, over 40% of manufacturers complained about the rising labor cost,
Zhao said.
     The fall of the PMI index is also due a higher previous comparison base,
CFLP's Chen said. 
     "We think the manufacturing sector is maintaining a stable improvement in
momentum, and the macro control policy should keep its continuity, " Chen
concluded. 
--MNI Beijing Bureau; +86 (10) 8532 5998; email: marissa.wang@marketnews.com
--MNI BEIJING Bureau; +1 202-371-2121; email: john.carter@mni-news.com
[TOPICS: MTABLE]

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