Caixin PMI reflects stable activity 
2019-08-02
Chinese manufacturing activity remained broadly stable in July, rebounding from a month earlier with an increase in overall new orders, according to a Caixin report released yesterday.
The Caixin China General Manufacturing Purchasing Managers’ Index, which is weighted toward private companies, edged up to 49.9 last month from 49.4 in June, Caixin magazine and research firm Markit said.
A reading above 50 signals growth while below 50 is a  contraction.
The Caixin PMI offers the first glimpse into the operating environment and is closely watched as an alternative to the official PMI.
The official manufacturing PMI, released on Wednesday, edged up slightly to 49.7 in July from 49.4 in the previous month.
The headline Caixin PMI figure posted only fractionally below the neutral 50 level, signaling broadly stable conditions across China’s manufacturing sector, according to the report.
Zhong Zhengsheng, director of macro-economic analysis at CEBM Group, pointed out that the subindexes for new orders and output both returned to expansionary territory and the gauge for new export orders rose slightly, though it remained in contractionary territory. “This indicates that domestic demand recovered and overseas demand was stable,” Zhong said.
Output grew steadily in July following a marginal drop in June. Some firms said relatively firmer demand conditions had led them to leave production volumes unchanged.
Meanwhile, total new orders rose at a fractional pace after a modest decline at the end of the second quarter. 
The upturn was likely driven by stronger domestic demand, as new export orders were little changed in July, according to the report, while some companies said the ongoing trade dispute with the US continued to weigh on export sales.
Subdued demand conditions nonetheless prompted firms to lower their workforce numbers for the fourth month in a row and at the quickest pace since February. The lack of personnel then became a key reason for a further increase in unfinished work. That said, the rate of backlog accumulation remained modest.
While the subindex for stocks of purchased items fell into contractionary territory, the measure for stocks of finished goods dropped further into decline, reflecting that increased orders consumed inventories to some extent, Zhong said.
Chinese manufacturers indicated that average input costs rose again in July though the rate of increase was marginal. 
