Chinese July contract of production activity more than expected on the fourth direct month

The official Beijing-Chinese meter for production activities on Thursday leaned to the worse contraction expected in July in the middle of slower economic growth and permanent tension in the US.

The index of production purchases for July was 49.3, according to Reuters survey there is missing expectations for 49.7.

The Chinese official production PMI has been under 50 stamps since April, reflecting a contraction rather than expansion.

“PMI is lower due to the weather challenges, as well as moving some commands to a low -ra -maraiphfer, such as Vietnam,” said Cameron Johnson, Shanghai leading partner in Tidalwave Solutions.

The total export data is expected to remain stable in the next quarter, Johnson said, noting that some production would be moved to another country to use lower tariffs until China sets its US prices

The tensions between the two large economies in the world escalated in April, each party depositing more than 100% on the import of goods from the other. In May, both parties agreed to return most of the other duties for 90 days, thus entering the US effective rate for exporting China to approximately 43%.

The ceasefire will be set to expire in mid -August. The reprints of two large economies in the world have ended a meeting this week in Stockholm without announcing the extension of agrement, which was widely expected.

At the beginning of July, the US came into agreement with Vietnam, which deposited 40% tariff, if the goods were made elsewhere, and we only transferred to Southeast Asia for dirty into American goods produced in Vietnam, otherwise face 20% to the US

As part of the latest Chinese production of PMI Sub-indexes, employment, new orders and stocks of raw materials were also closed in July. The job index checked up to 48, from 47.9 in June, while for new orders it fell to 49.4, out of 50.2 in June.

In July, the National Statistical Office granted a decline in production PMI traditional off -season and factors, such as extreme and torrential rain in parts of the country.

In one of the latest cases of extreme weather, at least 30 people on the outskirts of Beijing died this week after the city has issued the highest red warning according to the state media.

In July last year, the official reading of PMI for production was 49.4, with new Sub-Index orders to 49.3.

In addition to bad weather, Beijing’s “anti-in-volt” efforts to deal with excessive capacity problems affect the economy, Goldman Sachs analysts have given the note after the PMI data.

“The PMI production represented lower production, lower stocks, but higher price partial indications, while building PMI fell mainly on high Templars and heavy rainfall,” Analys added.

The official PMI, which does not vote, which measures activities in the service sectors, such as tourism, dropped to 50.1, out of 50.5 in June, Thursday’s data showed.

The decrease in PMI production and PMI services for July in accordance with the expectation of growth slowing in the second half of the year, the sales GDP in the first six months was supported mainly by businesses that increased orders before the uncertainty of tariffs, said Qin Yong, Chief Economist at the Ministry of Treasury Mitsui Banking Corporation. He spoke on Thursday at CNBC “China Connection”.

For businesses to start the orders again, they participate in the results of business interviews, he said. “So from August there will be a very obvious impact of tariffs on the Chinese economy … Given PMI in July, I would say that three are now some very worrying right situations.”

During the center of the high level of Politbyro on Wednesday, the highest Chinese leaders signaled plans for substantial new stimuli, although the country increases subsidies to encourage people to have more children.

If the US and China are able to expand the trade ceasefire, it is likely to “reduce the urge to intensify political support” for the economy, Bank of America analysts reported on Wednesday to meet Polbyro.

They pointed out that reading the meeting removed links to the reduction of interest rates and offered a small hint of further support for real estate market, while emphasizing the risk of local administration debt.

– Anniek Bao and Victoria Yeo from CNBC contributed to this report.