China manufacturing PMI increases to four-month high in July

Markit/Caixin's survey revealed Tuesday that activity in China's manufacturing sector improved in July for the second successive month, supported by accelerated increases in both output and new orders.

The Caixin/Markit services purchasing managers' index (PMI) rose to 51.1 last month on a seasonally adjusted basis from 50.4 in June. That was the strongest improvement since March. Economists' had predicted the reading to stay at 50.4. The 50 mark divides contraction and expansion.

Dr. Zhengsheng Zhong, director of macroeconomic analysis at CEBM Group, noted: "The Caixin China General Manufacturing PMI rose 0.7 points to 51.1 in July, the highest reading in four months. The sub-indices of output and new orders both rebounded further from May's recent lows. The sub-indices of input costs and output prices both continued to rise to hit four-month highs. Although the sub-index measuring stocks of finished goods remained in contraction territory and slid further, the sub-index showing quantity of purchases indicated the strongest rise in buying activity for five months, pointing to moderate growth in manufacturing production going forward. Operating conditions in the manufacturing sector improved further in July, suggesting the economy's growth momentum will be sustained. That said, it's unlikely that financial regulatory tightening will be relaxed."