Despite June’s limited rebound, the manufacturing index has dropped again this month. For the fifth consecutive month, the figure is below the threshold of contraction. Beijing had set growth for April-June at 7 per cent but analysts estimate that it will be around 5 per cent.

Beijing (AsiaNews/Agencies) – China’s factory sector contracted by the most in 15 months in July as shrinking orders depressed output, a worse-than-expected result.

The flash Caixin/Markit China Manufacturing Purchasing Managers’ Index dropped to 48.2, the lowest reading since April last year and a fifth straight month below 50, the level that separates contraction from expansion.

Economists had forecast a reading of 49.7, slightly stronger than June’s final reading of 49.4.

Output in July was 47.3, its lowest since March 2014. New orders and new export orders, which expanded in June, fell this month, according to the survey.

The survey contradicts recent data that suggested the world’s second-largest economy was stabilising after the government said annual growth in April-June would hold at 7 per cent, slightly better than market expectations.

However, financial giant Citibank told its customers "not to believe" the government figures, and said that the "real growth" in China’s economy would be "around 5 per cent".

Continuing contraction in factory growth is likely to fuel speculation that China will further loosen monetary policy to try to stoke activity.

Economists polled this month said they expect China to reduce interest rates by 25 basis points before the year-end.

The amount of cash that Chinese banks must hold as reserves was also expected to be reduced to keep the Chinese economy growing at 7 per cent this year, the slowest pace in a quarter of a century.

• china
• industry
• manifacturing
• dropped
• july