(Bloomberg) -- The first official gauge of China’s economy in the second half of the year showed continued upward momentum in the recovery.
- The official manufacturing purchasing managers’ index in July rose to 51.1 from 50.9 a month earlier, according to data released by the National Bureau of Statistics Friday.
- The non-manufacturing gauge dropped slightly to 54.2. Readings above 50 indicate improving conditions from the previous month.
Key Insights
- A sub-index of new export orders climbed to 48.4
- The rebound in economic growth is continuing into the second half of the year as government-led investment gains traction and global demand recovers. Economists have revised up their forecasts for full-year growth, and now see China’s economy expanding 2% this year.
- However, job and income losses will weigh on the recovery by limiting people’s ability to spend. Further smaller virus outbreaks will also damage confidence and spending, especially on catering, accommodation and tourism.
- Heavy flooding in central and southern China and viral outbreaks have caused some disruptions but are not expected to derail the economic recovery, according to a report from Bloomberg Economics before the data was released.
- “We see a slowdown in sequential momentum in the third and fourth quarter, though activities should continue to improve further with the base case assumption that Covid-19 remains under control in China,” Wang Tao, chief China economist at UBS AG in Hong Kong, wrote in a report ahead of the data.
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- A sub-index of manufacturing employment rose to 49.3, while non-manufacturing employment slowed to 48.1
- Separate PMI data on China’s high-tech sector and small businesses showed the economy has improved in the month, while a Bloomberg Economics gauge of early indicators suggested a slight deceleration.
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