China factory activity shrinks for third straight month

BEIJING

Factory activity in China shrank for a third straight month in July, official data showed on Wednesday, a day after Beijing pledged more state support to boost activity in the country's stuttering economy.

A key measure of factory output, the manufacturing purchasing managers' index (PMI) stood at 49.4 in July, down slightly from 49.5 in June, the National Bureau of Statistics (NBS) announced.

A PMI figure above 50 indicates an expansion in activity.

Beijing is struggling to achieve its target of 5 percent annual growth this year, a goal considered ambitious by many economists.

Three consecutive months of contraction in the vital manufacturing sector is a worrying sign for officials, ramping up pressure for more state support to boost the world's second-largest economy.

NBS statistician Zhao Qinghe attributed the latest decline to "traditional off-season production, insufficient market demand and extreme weather including high temperatures and flooding disasters."

Chinese leaders including President Xi Jinping promised Tuesday to help boost consumption and ease pressure on the country's ailing property sector, following a gathering of the Communist Party's top brass.

However, Zhang Zhiwei, president and chief economist at Pinpoint Asset Management, said in a note: "The Politburo meeting... did not signal a significant change of policy stance in the second half of the year."

Yesterday’s PMI data showed that "domestic demand remains weak", said Zhang, adding that "without a meaningful change of fiscal policy stance, the growth outlook largely depends on how long the strong export growth can continue."