According to Reuters, China’s manufacturing activity has been falling for the fourth month in a row, and it is no limit.
Earlier, some analysts highlighted the weak economic recovery in China after the coronavirus pandemic. Nevertheless, the local economy managed to get back on track, still remaining far from its peak. Thus, in July, activity in the Chinese manufacturing sector dropped for the fourth consecutive month. What is more, the services and construction sectors are on the verge of contraction.
There is still some positive information. According to the data from the National Bureau of Statistics of China, in July, the official manufacturing purchasing managers' index came in at 49.3 points, compared to 49.0 points in June. Notably, the indicator is still below the level of 50 points, which reflects a decline in business activity. Such a long-lasting drop in the manufacturing sector was last seen in 2019.
Meanwhile, in the construction sector, business activity slumped to 51.2 points from the high of 65.6 points recorded in March 2023. In addition, business activity in the non-manufacturing sectors of the Chinese economy slid to 51.5 points from 53.2 points reported in June. This fact points to a risk of higher unemployment in the region. Xu Tianchen, senior economist at the Economist Intelligence Unit, supposes that such a tumble in business activity could be a sign of a grave crisis in the construction sector. A bit earlier, Dan Wang, chief economist at Hang Seng Bank, predicted slumps in the key sectors of the Chinese economy.
Notably, in mid-July, most analysts stated a weak economic recovery in China. According to estimates, in the first half of 2023, the country’s GDP advanced by 5.5% to $8.27 trillion. Meanwhile, in the second quarter of the year, China’s economy expanded by 6.3%, failing to meet economists’ expectations of a 7.3% rise.
