China Factory Activity Unexpectedly Contracts

China’s official NBS Manufacturing PMI unexpectedly declined to 49.2 in July 2026 from 50.3 in the previous month, below market expectations of 50.0. It was the first contraction in factory activity since February, amid persistently weak domestic and external demand and elevated production costs. Output shrank for the first time in five months (49.9 vs 51.4 in June), while new orders contracted after expanding in the previous month (48.5 vs 51.2), with foreign orders also returning to contraction (49.6 vs 50.1). However, employment remained subdued (49.0 vs 48.5), while purchasing activity returned to contraction (49.4 vs 51.4) and supplier delivery times lengthened further (49.5 vs 49.9). On the price front, input cost inflation eased but remained elevated (53.2 vs 54.2), while output prices fell by the most in nine months (47.8 vs 48.2). Finally, business sentiment weakened slightly (54.1 vs 54.3).

China’s official NBS Manufacturing PMI increased to 50.3 in June 2026 from 50.0 in the previous month, surpassing market expectations of 50.1. It was the third consecutive month of expansion in factory activity so far this year, supported by strong high-tech manufacturing exports linked to the AI boom, even as shipments of other goods remained weak alongside subdued domestic demand. Output growth accelerated (51.4 vs 51.2 in May), while new orders expanded after contracting in the previous month (51.2 vs 49.9), with foreign orders also returning to expansion (50.1 vs 48.6). However, employment remained subdued (48.4 vs 48.6), while purchasing activity returned to expansion (51.4 vs 49.8) and supplier delivery times lengthened, albeit at a slower pace (49.9 vs 49.2). On the price front, input cost inflation eased to a six-month low (54.2 vs 60.5), while output prices fell for the first time in six months (48.2 vs 51.9). Finally, business sentiment strengthened slightly (54.3 vs 53.9).

China’s official NBS Manufacturing PMI edged down to 50.0 in May 2026 from 50.3 in the previous month, matching market expectations. The latest reading suggested manufacturers continued to face headwinds from soft domestic demand and rising input costs linked to the ongoing conflict in the Middle East. Output growth eased to a three-month low (51.2 vs 51.5 in April), while new orders shrank after expanding in the prior two months (49.9 vs 50.6). Also, foreign orders dropped after a modest increase previously (48.6 vs 50.3). Employment remained subdued (48.6 vs 48.8), and purchasing activity contracted for the first time in three months (49.8 vs 51.1). Supplier delivery times improved slightly (49.2 vs 49.5). On the price front, input cost inflation moderated but remained elevated (60.5 vs 63.7), while output price growth softened to its weakest pace in three months (51.9 vs 55.1). Finally, business sentiment stayed positive, though it eased slightly from April's level (53.9 vs 54.5).