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Free AccessREPEAT: July Caixin Mfg PMI At Highest Since March
Repeats Story Initially Transmitted at 03:02 GMT Aug 1/23:02 EST Jul 31
BEIJING (MNI) - Operating conditions in China's manufacturing sector
improved in July due to robust output and a solid upturn in new export sales,
according to the latest Caixin Manufacturing Purchasing Managers' Index (PMI)
released Tuesday.
However, business outlook sentiment edged down to its lowest level in 11
months, Caixin said.
The headline manufacturing PMI rose to 51.1 in July from 50.4 in June, the
strongest reading since 51.2 in March. It was also above the 50.6 reading last
July, according to data compiled by IHS Markit for Caixin.
Readings above 50 indicate expansion in the manufacturing sector while
readings below 50 indicate 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.
The rise in the Caixin index -- which focuses on smaller and medium-size
companies -- was not in line with the results of the official manufacturing PMI
jointly released on Monday by the China Federation of Logistics and Purchasing
and the National Bureau of Statistics. The CFLP/NBS PMI came in below
expectations at 51.4 in July, down from from 51.7 in June, mainly due to
sluggish new exports.
The Caixin index showed that new export sales increased at the
second-fastest rate since September 2014. "Panelists widely commented on an
improvement in market conditions and strong foreign demand," Caixin said.
As a result, both output and new orders rose at the fastest rates for five
months.
Manufacturers increase their purchasing activity in July at a faster pace
than in June, contributing to a renewed increase in input stocks.
"A number of companies mentioned rebuilding their inventories due to
stronger client demand," Caixin noted, adding "stocks of finished items declined
slightly, as some firms commented on using current inventories to fill new
orders."
But inflationary pressures ticked up, with both input prices and output
charges rising at faster rates than in June, Caixin warned.
Input costs increased at the fastest pace in four months. Manufacturers
complained about higher raw material prices, so companies raised output prices
for the second consecutive month.
Companies took a relatively cautious stand on employment, with staff
numbers falling in July, although Caixin said that "Backlogs of work continued
to increase at a modest pace similar to that seen in June."
"Operating conditions in the manufacturing sector improved further in July,
suggesting the economy's growth momentum will be sustained. That said, it is
unlikely that financial regulatory tightening will be relaxed," said Zhong
Zhengsheng, director of Macroeconomic Analysis at CEBM Group, a research
subsidiary of Caixin.
The Caixin Manufacturing PMI is based on data compiled from monthly replies
to questionnaires sent to purchasing executives at more than 500 manufacturing
companies.
--MNI Beijing Bureau; +86 (10) 8532 5998; email: marissa.wang@marketnews.com
--MNI Beijing Bureau; +86 (10) 8532-5998; email: vince.morkri@marketnews.com
To read the full story
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Please enter your details below.
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.