Chinese manufacturing activity broadly stabilized in July following a contraction in the previous month as new orders rebounded and business optimism improved, according to a survey compiled by Caixin and IHS Markit.
The headline seasonally adjusted Caixin China Purchasing Managers' Index for the manufacturing sector improved to 49.9 in July from 49.4 a month ago. The index came just below the neutral 50.0 level and above the 49.5 reading based on a consensus estimate of economists polled by Econoday.
Output was little changed in July, with some firms noting unchanged production volumes due to "relatively firmer demand conditions," according to the report.
Total new orders rebounded on the back of stronger domestic demand. New export orders were barely changed as some factory firms cited the ongoing U.S.-China trade spat as a factor that weighed on export sales.
Companies continued to slash employee numbers for the fourth month in a row and at the fastest pace since February. Meanwhile, business optimism regarding output for the year ahead was the strongest in three months.
A separate survey released by the National Bureau of Statistics yesterday showed that China's manufacturing activity continued to shrink in July.