Investing.com – China’s factory activities fell more than expected in July, official data from the statistics bureau showed on Tuesday.
The official manufacturing Purchasing Manager's Index (PMI) fell to 51.2 in July from 51.1 in June, lower than the expected 51.3 in July.
Meanwhile, the service PMI, covering services and construction which accounts for more than half of China’s economy, stood at 54, compared with 55 in June.
The composite PMI, which covers both manufacturing and services activity, fell to 53.6 in July, from June's 54.4.
“The data clearly show a slowdown in economic momentum,” said Raymond Yeung, chief greater China economist for Australia & New Zealand Banking Group Ltd. in Hong Kong. “It may justify the more proactive fiscal stance launched last week. The decline in new orders with new export orders staying flat means the slowdown is domestic, not an impact of the trade war.”
Last week, China unveiled a package of policies to boost domestic demand as recent trade developments continued to threaten the country’s economy growth.
China would ease restriction on banks’ issuance of financial bonds for small local firms, and would give tax cut on R&D expenditures among other measures, according to a government statement, adding that fiscal policy should be more proactive, although policy makers would refrain from using stimulus to flood the economy.
The private manufacturing PMI, which focuses on small and medium-sized enterprises, is set to be released on Wednesday.
The data’s impact on local equities seemed to be minimal, as the Shanghai Composite and the SZSE Component were largely unchanged by noon in Asia on Tuesday.