China: forward-looking indicators point to a contraction in manufacturing activity
Chinese industrial activity continues to send negative signals, this time in an effective way. The Caixin China General Manufacturing PMI fell to 49.2 in July 2023 from 50.5 in June, missing market estimates of 50.3 and reaching its lowest reading in six months.
This was the first drop in industrial activity since April, as new orders dropped after growing the previous two months, overseas sales contracted the steepest since September 2022 and purchasing levels fell for the first time time since January.
In addition, employment fell for the fifth consecutive month, while backlogs remained stable. Delivery times have deteriorated slightly as some suppliers have reduced their inventory levels .
On the pricing side, input costs fell for a fourth month and manufacturing expenses decreased further, thanks to competitive pricing strategies.
Finally, confidence has reached a 4-month high, but the degree of optimism is historically low. “Monetary policy has little effect on increasing supply,” said Wang Zhe, an economist at Caixin Insight Group. “The priority should be an expansionary fiscal policy that targets demand.” Here is the related graph
We went back to last autumn when we had not yet completely passed the By now everyone is expecting a strong stimulus which, once announced, has not yet materialized in its practical effects. The problem is that these stimuli have more been announced than applied, that the problem of the real estate crisis has not yet been resolved and that, on the other hand, China risks following Japan's path in the 1990s. China will try to revive the real estate sector by easing restrictions, but can this be enough to revive growth?
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The article China: forward-looking indicators point to a contraction in manufacturing activity comes from Scenari Economici .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/cina-gli-indicatori-previsionali-indicano-una-contrazione-nellattivita-manifatturiera/ on Tue, 01 Aug 2023 08:00:07 +0000.