BEIJING, China: Expansion of China's factory sector in July was the most sluggish in seventeen months, on the back of steeper prices of raw materials and upkeep of equipment, as well as inclement weather bogging down businesses and driving apprehensions of a slump in the world's second-largest economy.
According to the National Bureau of Statistics, the July Purchasing Manager's Index (PMI) figure for China's manufacturing sector fell to 50.4, as compared to June's 50.9.
Analytical projections hinted at the figure sliding to 50.8, the steepest dive since 35.7 recorded in February 2020 as a result of China's lockdown, as it sought to stem the spread of COVID-19.
A spokesman of the National Bureau of Statistics stated that PMI's sub-index for production slid to 51.0, compared to June's 51.9, attributable to adverse weather, in addition to equipment upkeep.
The sub-indices showed that new orders were down to 50.9, as compared to 51.5, thereby mirroring a slump in demand.
"The most alarming signal is the new export order index, which is at the lowest level since July last year," according to Pinpoint Asset Management's chief economist Zhiwei Zhang.
The new export order index for the country fell consecutively for a three-month period since May and measured a value of 47.7 last month.
Raw material costs, one of the sub-indices, were recorded at 62.9 in July, from 61.2 the month before, thereby hinting at a spike in costs. The steep cost of raw materials has lowered the value of businesses, in addition to discouraging order-taking by Chinese exporters.