- Caixin
Business activity in China's manufacturing sector plunged to the lowest level in two years in July, adding to further signs of the economic slowdown in the Asian giant in the third quarter. The final reading of the Caixin PMI came in at 47.8 for the reported month, down from 49.4 recorded in June, and was the weakest indicator since July 2013. The manufacturing activity barometer comes at the time of a sharp and profound decline in China's stock market, with the broad Shanghai Composite equity market index plummeting some 28.5% since June 11. Analysts said that the precipitous slide in the stock market in late June and July probably had an impact on sentiment, adding to pressure from an already-weak property market and dull domestic and overseas demand. Moreover, the additional signals of manufacturing weakness could prompt the Chinese government to redouble attempts to kick-start the world's second biggest economy with more spending and relaxed monetary-policy measures. The key manufacturing sector has been a major drag on the economy's less-than-stellar performance, reflecting overcapacity in traditional heavy industry such as steel and cement as well as weak demand for exports of the country's light-industrial products.
Meanwhile, the non-manufacturing PMI measuring activity in the services sector and construction climbed 0.1 points to 53.9 in July.
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