Manufacturing Activity in China Continues to Expand
Manufacturing activity in China
Manufacturing activity in China (FXI) slightly improved in July 2017, with China’s manufacturing PMI (purchasing managers’ index) rising to 51.1 from 50.4 in June 2017, according to an IHS Markit report. Output and new orders increased at faster rates for five months, supported by an upturn in new export sales.
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Improved operating conditions in China
Operating conditions in China’s (MCHI) manufacturing sector improved for a second successive month, following slight deterioration in May 2017. July 2017 brought some growth in output—the strongest seen in the last four months.
The improved performance in the headline index was mainly supported by a robust and accelerated increase in total new business. Improved market conditions and strong global (ACWI) demand contributed to growth in the new orders in July 2017. The new exports sales increased at the second fastest-rate seen since September 2014.
Employment and purchasing activity
Job creation in the manufacturing sector remained slow in July 2017, as companies adopted a cautious approach to employment. Meanwhile, the rate of job cuts in July 2017 was fastest seen in the last ten months. Purchasing activity in China (EEM) saw a more rapid rise for a second month, with stronger client demand. On the cost front, average input costs increased at a solid pace, the fastest seen in four months. As a result, companies raised their prices for a second month.
The Chinese manufacturing sector’s (VWO) optimism towards the next 12-months weakened slightly in July 2017. Confidence slipped to its lowest level since August 2016. Let’s look at manufacturing activity in India in our next article.