China manufacturing slumps to 15-month low
The factory output sub-index decreased at a faster rate, falling to its lowest in 16 months.
The preliminary Purchasing Managers’ Index from Caixin Media and Markit Economics was at 48.2 for July, down from 49.4 the previous month.
However, crude oil futures rebounded from multi-month lows recorded overnight on Wednesday, with U.S. crude up about 0.7 percent at $48.79 a barrel, after marking its lowest settlement since March 31.
It was down sharply from 49.4 in June, and it moves further beneath the boom-or-bust line of 50 that separates expansion from contraction.
The release weakens the outlook for the world’s second-largest economy, which grew more than analysts estimated in the second quarter as policy makers stepped up support and a stock market boom spurred services.
The Caixin PMI was previously known as the HSBC PMI. But there were wide doubts about whether there could be a sustainable recovery.
Some economists had warned that the crash could have a wider impact on corporate performance and confidence, given some companies had derived a substantial chunk of their profits from investment income as opposed to core business activity. It remains to be seen whether effects from China’s pro-growth measures “can be sustained”, he said.
London copper fell on Friday to its lowest level since 2009, with a survey showing a contraction in activity in China’s factories fuelling worries over demand in the top metals consumer as stockpiles steadily mount. “European economic indicators and inflation data are not as strong as they were at the start of the year, and, of course, the US is steadily preparing to hike rates”, Barclays chief Japan forex strategist Shinichiro Kadota said in Tokyo.
China’s economy expanded 7.4 percent last year, the weakest pace since 1990, and slowed further to 7.0 percent in each of the first two quarters this year.
Additional policy support would make it the most aggressive easing cycle overseen by the central bank since the height of the 2008/09 global financial crisis.
Domestic market reaction to Friday’s survey was muted, with stocks rising slightly in the morning session, while the spot yuan remained docile.