A Reuters poll of 31 economists expects China's official manufacturing PMI to drop to 50.0 in July from 50.3 the previous month, the mark separating growth from contraction. Weak domestic consumption and cost pressures from the Middle East War offset the boost production drew from strong global demand for Chinese goods.
China's factory activity growth likely stagnated in July, according to a Reuters poll of 31 economists that forecast the official manufacturing purchasing managers' index falling to 50.0 from 50.3 in June. That level marks the line separating growth from contraction.
Weak domestic consumption and cost pressures from the Middle East War offset the lift production took from strong global demand for Chinese goods. The National Bureau of Statistics releases the data on Friday.
Exporters benefit while domestic buyers hold back
Chinese manufacturers in high-tech sectors have benefited this year from robust global demand for AI-related products, but those catering to the domestic market have grappled with tepid appetite. Gross domestic product in the second quarter expanded at the slowest pace in more than three years, weighed by soft retail sales and weak investment, fuelling expectations for more supportive policies to prop up growth.
Growth in bank lending has also been sluggish, which prompted the central bank to issue window guidance to banks to step up lending in recent months.
Politburo meets by month-end, yet analysts see no major stimulus
The market is closely watching for policy signals from the Politburo, which is due to meet by the end of July to discuss economic matters. Yet analysts say major stimulus is unlikely, and that policymakers may stick to the implementation of existing tools, such as stepping up funding for infrastructure projects.
To boost domestic demand, policymakers would need to address a years-long housing market slump and poor job security, which have sapped the confidence of households and nudged them to save instead of spend.
Soaring exports blunt the case for acting now
Soaring goods exports have blunted the urgency for strong stimulus, surging 27% year-on-year in U.S. dollar terms in June, and have emerged as a main growth driver. Industrial profits also extended growth in June, although the 15.1% expansion was slower than the 21.1% year-on-year growth in the previous month.
The private sector RatingDog manufacturing PMI, due to be released on August 3, is expected to dip to 51.5 from 51.7 in June.
Source: Investing.com
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