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2nd LD: China manufacturing activity retreats in July

Xinhua, August 1, 2015 Adjust font size:

China's manufacturing business activity retreated slightly in July from the previous month, barely avoiding a contraction again last seen in February.

The manufacturing purchasing managers' index (PMI), a key measure of factory activity in China, posted at 50.0 in July, down from 50.2 in June, according to data compiled by the National Bureau of Statistics (NBS) and the China Federation of Logistics and Purchasing.

Factory activities had remained in expansion territory for a four-month period extending from March to June. July's data came in right at a reading that demarcates growth and contraction.

Zhao Qinghe, a senior NBS analyst, attributed the retreat to continued weakness in both domestic and overseas demand.

He also attributed some companies' planned production cutbacks for equipment repairs and technological upgrades, as well as unfavorable weather conditions as storms and high temperatures affected production.

The production sub-index posted at 52.4 last month, down from 52.9 in June. The sub-index for new orders came in at 49.9 in July, down 0.2 percentage points compared to June, the data showed.

"The slight decrease was a normal fluctuation," said Chen Zhongtao, an analyst at the China Logistics Information Center, who agreed with Zhao on unfavorable weather's negative impact on production.

However, Chen played down the retreat, saying the fundamentals of the Chinese economy remains in good shape as employment is stable and companies are generally positive on business prospects.

The analyst added that domestic demand will see bigger room for growth in the rest of the year, which is supported by a raft of infrastructure projects to be rolled out.

Minister of Housing and Urban-Rural Development Chen Zhenggao said in April as much as 1 trillion yuan in investment would be needed if China builds 8,000 km of utility tunnels each year, not including indirect investment such as spending on steel, cement and machines.

In contrast to lukewarm manufacturing activity last month, the nation's services industry saw stronger growth momentum, with PMI for the non-manufacturing sector rising to 53.9 in July from 53.8 for June, the data showed.

The rise has marked the second straight month of expansion. Endi