Chinese manufacturing output surges in July: Caixin PMI

Output and new orders in China's manufacturing sector expanded at the fastest rate for 9½ years in July, providing further evidence of a steady rebound from the Covid-19 outbreak.

The manufacturing sector purchasing managers' index (PMI) published by private-sector Chinese firm Caixin rose to 52.8 last month, up by 1.6 percentage points from June. A reading above 50 indicates an expansion in the sector.

Output and new orders rose by the most since January 2011 as customer demand strengthened. The steady rebound came despite new Covid-19 outbreaks in some parts of China and flooding in the south of the country, and followed record high crude imports and refinery runs in June.

The output sub-index increased for a fifth consecutive month, with many companies reporting stronger customer demand amid a further recovery in market conditions following the Covid-19 outbreak, Caixin said.

The raw material index expanded for the second month in a row to the highest level since March 2018. The finished goods inventory index was in the contraction range for the third month in a row, reflecting rising demand for goods.

But the global pandemic continued to weigh on overseas demand for Chinese goods. The index of new export orders contracted in July for the seventh consecutive month, although the rate of decline was the lowest since January.

Caixin's indicator comes after the official PMI published by China's national statistics bureau (NBS) on 31 July also showed an expansion, rising to 51.1pc in July, up from 50.9pc a month earlier to the highest level since April. Caixin surveys fewer, mainly smaller and medium-size companies for its PMI compared to the government's index.