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China’s factory activity slows down in July

China's factory output slows down in July

Concerns are rising over China's economy amid rising number of Covid 19 cases and increase in raw material costs. Al Jazeera reported that oil prices dropped after China’s factory activity grew at a slower pace in July.

The news organisation in a report said that China’s factory activity growth slipped sharply in July as demand contracted for the first time in more than a year.

According to news agency Reuters, the official manufacturing Purchasing Manager's Index (PMI) eased to 50.4 in July from 50.9 in June, data from the National Bureau of Statistics (NBS) showed. Remaining above the 50-point mark, however, separates growth from contraction, it said.

Also read: Engines of China's growth — the local governments– stare at financial crisis

Higher input costs along with unfavourable weather conditions are among the reasons for the slower factory output.

“China's economy has largely recovered from disruptions caused by the pandemic, but manufacturers are grappling with new challenges from higher raw material prices, surging logistics costs and global supply chain bottlenecks,” Reuters said.

Analysts have said that rising raw material costs have become a cause for concern.

"China has been grappling with rising costs. This has been a cause for concern for sometime now, it is not new as such," an analyst told India Narrative.

South Morning China Post in May noted that a wave of shutdowns and temporary production stoppages is sweeping through a number of factories in China’s southern manufacturing hub as the surging cost of raw materials eats away at profits and raises concerns over inflation risks in the world’s second-largest economy.