China’s economy will need more than last week’s lacklustre collection of policy thought bubbles if it is to arrest the slump in activity that continued for a 4th successive month in July.
Not only did the country’s huge manufacturing sector suffer another contraction in growth but the main driver of economic activity – services – saw its weakest pace of activity so far this year.
Chinese consumers remain reluctant to spend and that is showing up in the weak consumer inflation data which is hovering on the edge of deflation.
The government’s policy ideas revealed last week were short on immediate action and long on design and implementation – 2024 instead as soon as possible.
Monday's end of month official activity surveys from the National Bureau of Statistics for July were a gloomy read out on the health of the world’s second biggest economy.
The official manufacturing purchasing managers’ index came in at 49.3 in June — compared with 49.0 in June, 48.8 in May and 49.2 in April – according to the NBSon Monday. July’s reading was slightly better than the 49.2 median forecast in a Reuters poll.
Monday’s figures also showed China posting its weakest official non-manufacturing PMI reading this year, coming in at 51.5 in July — compared with 53.2 in June, 54.5 in May and 56.4 in April.
That saw the general composite survey ease to a reading of 51.1 points in July from in June.
This was a fourth straight monthly decline and was contrary to the line from the government and forecasters that the post Covid re-opening of the Chinese economy would see the economy rebound, helping take global growth higher.
Nothing of the sort has happened.
