Official data: China’s manufacturing slump deepened as tariff uncertainty lingers

China’s manufacturing sector shrank for a third consecutive month in July, underscoring persistent pressure on factory output despite a recent tariff truce with the United States.

The official manufacturing purchasing managers’ index (PMI) fell to 49.3 in July, down from 49.7 in June, hitting a six-month low and remaining below the 50-point line that separates expansion from contraction, according to data from the National Bureau of Statistics.

The downturn was broad-based. The sub-index for total new orders slipped to 49.4 from 50.2, while the gauge for employment edged up slightly to 48 from 47.9—still deep in contraction territory. Notably, new export orders dropped for the 15th consecutive month, easing to 47.1 from 47.7, which could suggest that a brief export rally ahead of anticipated US tariffs has run its course.

Non-manufacturing activity, which includes services and construction, offered little reprieve. The sector’s PMI ticked down to 50.1 from 50.5 in June, pointing to a slower pace of expansion in the broader economy.

Beijing attributed the subdued manufacturing performance to seasonal disruptions, including high temperatures and flooding, calling July “the traditional off-season” for factory operations. However, caution remains that the buyers are beginning to look elsewhere as the tariff war’s effects looms.

Written: Farid Muzaffar