China Factory Activity Unexpectedly Shrinks

The Caixin China General Manufacturing PMI unexpectedly fell to 49.5 in July 2025, down from 50.4 in June and below forecasts of 50.2. The latest reading marked the second contraction in factory activity in three months, driven by a sharper decline in new export orders amid global trade uncertainty. Output fell for the second time since October 2023 due to a slowdown in new orders growth. Employment declined, while purchasing activity expanded after falling over the previous two months. Supplier performance continued to deteriorate due to shipment delays and supplier shortages. On the price front, input costs rose for the first time in five months, driven by higher raw material prices. However, selling prices fell as market competition intensified. Looking ahead, business sentiment improved on hopes of better economic conditions and expectations that promotional efforts will help boost sales in the year ahead. However, overall optimism remained below the series average.