China's Manufacturing Sector Expands Less Than Expected

Ibeth Rivero

According to data released by both Caixin Global and IHS Markit, China's manufacturing sector activity fell to a 15-month low, despite expanding in the month of July.

The Manufacturing Purchasing Managers’ Index went down to 50.3 in July after being at  51.3 in the previous month, signaling a slower expansion of the sector. The figure was also below expectations of 51.1.

Analysts link this economic activity slowdown with a fall in demand in both consumer and intermediate goods, which has been linked with rising raw material costs. This has affected the profits of industrial firms.

The economy is still facing huge downward pressure,” commented an analyst at Caixin Insight Group. Market demand was sensitive to product prices, which limited enterprisespricing power’”.

According to additional data released by the organization, export orders grew slightly faster than the previous month, though still at a slow pace given the effects of the pandemic on overseas demand. Employment also grew in the sector for the fourth consecutive month, though also at a slower pace.

In the second quarter, the Chinese economy grew by 7.9% according to data released by the National Bureau of Statistics. Economic growth was lower than expectations of 8.1%. These data resemble that of the United States, which also grew less than expected during the quarter at 6.5% in annual terms, which was around two percentage points below forecasts.

China continues struggling with the spread of the COVID-19 virus, which has infected 93,103 citizens since the beginning of the pandemic and led to 4,636 deaths. The Chinese government has launched a massive vaccination campaign, leading the world in both vaccinations and vaccine exports.

So far, the government has distributed around 1.65 billion dosages among the local population, while 223 million are now fully vaccinated. The country is expected to vaccinate approximately 70% of its population by the end of the current year, so it seems that China is approaching this goal.

China is currently the leading exporter of vaccines with 252 million dosages exported as of May this year, which was about 42% of the country's total vaccine output. This accounts for one-sixth of the world's total vaccine output and is higher than other countries' exports levels.

Ibeth Rivero

Ibeth contributes daily market commentary in both English and Spanish (both of which she speaks fluently) and she also manages the DailyForex mobile app to ensure that traders around the world are getting important market updates in real time.

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