Sentiment in the country’s manufacturing sector remained positive in July, with the level of confidence rising from June’s low. Despite the reduction in new work, firms were positive that business development efforts and the launch of new products can help to drive sales in the year ahead.

The headline seasonally-adjusted PMI—a composite indicator designed to provide a single-figure snapshot of operating conditions in the manufacturing economy—fell to 49.8 in July from 51.8 in June.

Easing below the 50 neutral mark, the latest data signalled that conditions in the manufacturing sector deteriorated for the first time in nine months, albeit only marginally.

A renewed reduction in new work inflows underpinned a marked slowdown in the pace of output growth. As a result, firms lowered their purchasing activity, though employment conditions remained relatively stable, S&P Global, which compiled the data, said in a release.

On the prices front, input cost inflation eased in the latest survey period, which alongside heightened competition, led to Chinese manufacturers lowering average selling prices in July.

Manufacturing output expansion was the slowest in the nine-month sequence during July, attributed to the first fall in new orders for a year., S&P Global, which compiled the PMI data, said in a release.

Subdued demand conditions and reductions in client budgets underpinned the latest fall in new work in China.

Export orders, meanwhile, continued to rise, but the rate of growth slowed from June to a modest pace.

Purchasing activity declined for the first time since October 2023 as Chinese manufacturers reduced their buying activity in a period of falling new orders. This led to a renewed depletion of stocks of purchases.

On the other hand, stocks of finished goods rose again, though this was partially driven by delays in outbound shipments. Supply constraints were further reflected by data on average lead times for the delivery of inputs, which lengthened for a second successive month.

Employment levels remained relatively stable, falling only fractionally in July. While some firms added headcounts to cope with ongoing workloads, others opted to reduce staffing levels, anticipating lower production needs as new orders fell.

Average selling prices declined for the first time in July since May. Chinese manufacturers indicated reducing selling prices to support sales amid increased competition. This was partially supported by input cost inflation easing to the lowest in the current four-month sequence.

Fibre2Fashion News Desk (DS)