According to the latest private survey, the expansion speed of China’s manufacturing industry in July has dropped to a four-month low, performing below market expectations. This further confirms the official data released last Friday, deepening concerns among observers about China’s slowing economic growth and weak domestic demand.
The report published on Monday (August 3) by RatingDog and S&P Global indicated that China’s Purchasing Managers’ Index (PMI) for the manufacturing sector in July decreased from 51.7 in June to 50.9, below analysts’ expectations of 51.5.
A PMI above 50 indicates expansion, while below 50 signifies contraction. The data shows that although China’s manufacturing sector has been in the expansion zone for the eighth consecutive month, the growth rate has declined to a four-month low.
In particular, the growth rate of new orders has slowed to the lowest level since January this year. While new export orders showed some growth after consecutive contractions in May and June, the increase was limited.
This data further deepens concerns about China’s economic outlook. Official figures reveal that China’s economy grew at a rate of 4.3% in the second quarter, the lowest in over three years, and below the lower limit of the annual growth target range of 4.5% to 5.0%.
Reuters reported that the Chinese Communist Party leadership pledged at the end of July to accelerate spending on budgeted infrastructure projects for the remainder of the year, rather than planning large-scale new stimulus measures, highlighting the pressure to sustain economic growth in the second half of the year.
The survey indicates that manufacturers have reduced procurement activities for the first time since November 2025.
The report points out that input inventories have increased for the eighth consecutive month, marking the longest period of growth since 2006-2007. As a result of the continued accumulation of previously procured inputs, companies have reduced new procurement activities.
Meanwhile, manufacturers have increased employment for the second consecutive month, with hiring at the fastest pace since August 2023, primarily driven by increased orders, production levels, and the hiring of temporary workers. However, overall job growth remains moderate.
Yao Yu, founder of RatingDog, stated, “The manufacturing PMI is expected to remain in the expansion zone in the short term, but the growth rate may become more moderate.”
The survey shows that businesses remain optimistic about output prospects for the next 12 months, with slightly improved confidence compared to June. However, with official manufacturing data unexpectedly falling into contraction territory and continued weak domestic demand, the reduction in procurement activities and the continued accumulation of input inventories indicate that the foundation of China’s economic recovery remains unstable, and growth momentum may continue to weaken.