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Investing.com-- China’s manufacturing sector shrank more than expected in July, official purchasing managers index data showed on Thursday, as weather-related disruptions largely offset improving trade ties with the United States.
Manufacturing PMI read 49.3 in July, compared to expectations that it would remain unchanged at 49.7. A reading below 50 indicates contraction, with the sector now contracting for a fourth consecutive month.
China’s National Bureau of Statistics said the slowdown was in part due to seasonal trends and weather-related disruptions in activity. China was wracked by extreme weather this summer, which saw large swathes of the country subject to torrential rain and sweltering heat.
While the manufacturing sector had shown some signs of recovery in June, especially following a trade deal between the U.S. and China, July’s reading indicated that activity still remained under pressure.
China still faces a roughly 50% tariff on exports to the U.S., while demand in the rest of the globe was seen cooling amid economic disruptions caused by U.S. trade tariffs.
Local demand in China also remained weak, as recent stimulus measures from Beijing provided temporary relief. China will ramp up its stimulus measures in the coming months, the country’s Politburo signaled this week.
Sectors outside manufacturing struggled in July. China’s non-manufacturing PMI read 50.1 in July, missing expectations of 50.3 and falling from the 50.5 seen in the prior month. The PMI was now barely in expansion territory.
Chinese composite PMI sank to 50.2 in July from 50.7 in the prior month.