## China’s Manufacturing Activity Contracts in July, Signaling Economic Slowdown
China’s manufacturing sector experienced a worse-than-expected contraction in July, according to the latest Purchasing Managers’ Index (PMI). This downturn, coupled with slower economic growth and ongoing trade tensions with the U.S., raises concerns about the country’s economic outlook. Here’s a breakdown:
- **Manufacturing PMI:** The official manufacturing PMI for July fell to 49.3, below the expected 49.7 and the critical 50-point mark that separates expansion from contraction. This marks the fourth consecutive month of contraction.
- **Factors Contributing to Contraction:** Several factors are at play, including seasonal weather challenges (extreme heat and heavy rain), and businesses shifting orders to countries with lower tariffs, such as Vietnam.
- **Trade Tensions:** The U.S.-China trade truce, which temporarily reduced tariffs, is set to expire in mid-August. Negotiations to extend the agreement have yet to yield results, creating uncertainty.
- **Impact of Tariffs:** The potential expiration of the truce could lead to a more significant impact on China’s economy, as businesses may be hesitant to increase orders.
- **Sub-Index Contractions:** Key sub-indexes within the PMI, including employment, new orders, and raw materials inventory, also contracted in July.
- **Economic Slowdown:** The decline in manufacturing and services PMIs aligns with expectations of a growth slowdown in the second half of the year. GDP growth in the second quarter was already slower than in the first.
- **Government Response:** China’s leaders have not signaled plans for substantial new stimulus measures, which could further impact economic growth.
For more details, you can read the original article on CNBC: [https://www.cnbc.com/2024/08/03/china-manufacturing-pmi-july-2024.html](https://www.cnbc.com/2024/08/03/china-manufacturing-pmi-july-2024.html)