China’s Factory Output Slows in July

• China’s Factory Output Slows in July

The activities of companies in China were affected by the authority’s decision to curb financial risks.
Data released on Monday showed Manufacturing Purchasing Managers Index slowed from 51.7 in June to 51.4 in July. Below 51.5 projected by most experts.
While non-manufacturing PMI stood at 54.5, down from 54.9 recorded in June. Figures higher than 50 indicate expansion.
The world’s largest economy performed better than analysts had projected in the first half. However, challenges lie ahead for the second half of the year as policy-makers slow down the pace of credit approval and promise to cut excessive leverage.
“The economy in the second half will likely slow down gradually,” said Ding Shuang, chief China economist at Standard Chartered Plc in Hong Kong. “With the deleveraging in process, we will see gradual lagged effects on the economy,” which will show up more clearly at the end of the third quarter, he said.
“July’s PMI signals a slight softening of the manufacturing sector,” said Raymond Yeung, the Hong Kong-based chief economist at Australia & New Zealand Banking Group Ltd. “External demand will likely drop in the summer and third quarter GDP growth isn’t expected to hit 6.9 percent. But we aren’t worried about the decline today.”
The report showed input prices jumped to 57.9, while output prices to 52.7. New oversea orders index declined to 50.9. Indicating the drop in business confidence of small and medium size companies.