Two surveys show Chinese manufacturing activity in July was weak but better than some forecasters expected.
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A business magazine, Caixin, said Monday, Aug. 1, 2016 its purchasing managers index rose to 50.6 from June’s 48.6 on a 100-point scale on which numbers above 50 show activity expanding.
“The government has realized the downward pressure is great but they’ve also realized that stimulus to stimulate the economy continuously is not a good idea and they want to continue to focus on reform and deleveraging”, Zhao said.
Production grew faster, the Associated Press reported.
There was some reprieve for the manufacturing industry as the slump in the value of the pound continued to help United Kingdom exports. “Expansions in output and employment are clearly being driven to a large extent by surging growth in Germany, while growth has nearly stalled in both Italy and Spain and contractions are being seen in France and Greece”.
The shedding of staff was linked to the slide in output, with restructuring, redundancies and outsourcing all leading to job cuts, the survey said.
Amid reports of lower prices paid for fuel and some commodities, average input costs facing service providers fell in July.
The survey signalled incoming new business declined for the first time since the end of 2012, while there was a fourth successive month-on-month reduction in the volume of outstanding business in the sector.
“Without new orders coming through, this downward trajectory is likely to get worse, at least in the short term”.
It is predicting g rowth will hit 1.7% overall this year with a decline of 0.2% in the third quarter and risk of “further deterioration”, while GDP will slow to 1% in 2017 while inflation is forecast to reach more than 3%, according to its analysis.
The Bank of England is set to respond to the deteriorating economic outlook by cutting its main interest rate on Thursday from the current record low of 0.5 percent and unveiling other measures created to stimulate the British economy.
Some economists have even suggested that Britain could be heading towards another recession.
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Mike Rigby, head of manufacturing at Barclays, added: “These disappointing figures would indicate that the uncertainty deterring manufacturers from making vital investment decisions prior to the European Union referendum has taken a stranglehold since the vote and we can expect to see businesses continuing to protect cash and guard investment”.
