China manufacturing growth slows in July

China’s manufacturing growth slowed in July, partly due to higher product prices, according to figures released on Monday.

The Caixin manufacturing purchasing managers’ index fell to 50.3 from 51.3 in June, missing expectations for a reading of 51.0. This marked the worst reading in 15 months.

A reading above 50.0 indicates expansion while a reading below signals contraction.

"The economy is still facing huge downward pressure," said Wang Zhe, senior economist at Caixin Insight Group, adding that high product prices brought down demand, particularly for consumer goods and intermediate goods.

China’s official PMI for manufacturing, which came out over the weekend, showed a drop to 50.4 in July from 50.9 the month before. This was the slowest pace of expansion since the pandemic hit last year and below consensus expectations for a reading of 50.8.

Julian Evans-Pritchard, senior China economist at Capital Economics, said: "Averaged across both surveys, the output component dropped from 51.5 to 50.9, hinting at slower growth in industry.

"Respondents to the surveys noted that material shortages and transportation delays were still holding back output. Delivery times lengthened further while firms were still drawing down on their inventories, although not as rapidly as in the previous month. The output price indices edged down last month and are consistent with much more modest month-on-month gains in producer prices than earlier in the year."

Meanwhile, the official non-manufacturing PMI edged down to 53.3 from 53.5 in June, in line with consensus expectations.