China July PMI Shows Contraction Across Sectors

China's manufacturing and services sectors unexpectedly contracted in July, according to official data released on July 31, 2026, highlighting growing pressure on the world's second-largest economy. The National Bureau of Statistics reported that the manufacturing Purchasing Managers' Index (PMI) fell to 49.2 in July from 50.3 in June, marking the first contraction since February and missing market expectations. A reading below 50 indicates shrinking activity.

The slowdown was broad-based. The non-manufacturing PMI, which tracks services and construction, declined to 49.0 from 50.2, also falling below the threshold for expansion. The composite PMI, combining both sectors, dropped to 49.3, reaching its weakest level since China emerged from its pandemic restrictions in 2022. Economists pointed to severe typhoons that recently swept across parts of the country, disrupting construction projects and hurting services activity. The official construction PMI fell to a record low of 47.0.

Analysts said the manufacturing sector was primarily dragged down by a sharp decline in new orders, signaling that sluggish domestic demand remains the biggest obstacle to growth. In contrast, export...