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China Factory Activity Falls to 15-Month Low

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China is still experiencing flagging factory activity as new orders waned and weighed on output in July, and the month marked the lowest manufacturing activity the Asian nation has seen in 15 months.

The preliminary Caixin China Purchasing Manager’s Index (PMI) fell to 48.2 points (a reading above 50 signifies that activity expanded and sub-50 indicates contraction). This was the first PMI figure published since Caixin took over sponsorship of Markit’s China PMI from HSBC.

China suffered from sluggish output and expansion in new orders and new export orders, stocks of purchases and quantity of purchases, which, according to the report reflects, “still-tepid domestic and foreign demand and a general lack of willingness for manufacturers to replenish inventories.”

The results come in contrast to last month’s HSBC report which said China’s PMI rose to a three-month high of 49.6—though that still pointed to contraction—but it gave rise to belief that conditions in the country were stabilizing.

“Recent signs of economic stability were mainly the result of a rebound in infrastructure investment and the real estate market,” Hu Jiani, analyst at Cinda Securities in Beijing told Reuters. “But it’s hard to judge if the rebound is sustainable or not.”

Input and output prices in China in July were still under pressure and weren’t supporting inflation, the report noted. Employment was the only sector that saw an uptick over June though it too remains in contraction territory.

Caixin said the recent dips in commodity prices are expected to make manufacturers less inclined to restock.

The final Caixin manufacturing PMI will be published Aug. 3.

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