China Caixin manufacturing purchasing managers index fell to 49.8 July from 51.8 in June. pic.twitter.com/27MT6TkOZm
— Tracy (𝒞𝒽𝒾 ) (@chigrl) August 1, 2024
In a surprising turn, China’s Caixin Manufacturing Purchasing Managers’ Index (PMI) contracted to 49.8 in July 2024, a notable drop from June’s 51.8 reading. This contraction signals a slowdown in manufacturing activity, highlighting concerns about the health of the world’s second-largest economy.
Key points from the latest data include:
- Output Expansion: Manufacturing output expanded at the slowest pace in nine months, suggesting that the sector is losing momentum.
- Input Costs and Selling Prices: Average selling prices fell as input cost inflation eased, reflecting a weakening pricing power among manufacturers.
- Business Confidence: Despite these challenges, business confidence saw a slight improvement in July, indicating some optimism about future prospects.
- Supply and Demand Dynamics: The supply of goods continued to outpace demand, with total new orders declining for the first time since July of the previous year.
This contraction in the Caixin PMI is significant not just for China but also for global markets. The health of China’s economy is closely watched, as it has far-reaching implications for global trade and investment. The downbeat manufacturing data has already impacted currencies like the Australian Dollar (AUD), which is sensitive to Chinese economic performance. The AUD faced renewed selling pressure, hovering near intraday lows as investors reacted to the disappointing figures.
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