Chinese factory action has defeated expectations once more, expanding for the fifth consecutive month and recovering at a quicker speed, new data shows.

That is higher than analysts predicted — those polled by Bloomberg had forecast it to remain at June’s degree, while economists polled by Reuters expected it to ease to 50.7. 

The PMI is an integral gauge of manufacturing activity measured by means of a survey of factory owners and purchasing managers. Any reading above 50 indicates growth in factory output, while a reading below indicates contraction. It is the fifth month in a row that the essential figure topped the 50 mark.

“Policies of balancing epidemic control and financial development farther yield tangible berry, as economic vitality continues recovering and businesses keep registering better operational results,” stated Zhao Qinghe, senior statistician at China’s National Bureau of Statistics (NBS), a body which reproduces the PMI data. 


FILE PHOTO: Shoppers outside Causeway Bay shopping mall in Hong Kong, China © Reuters / Lucy Nicholson
Chinese customer industry in’reasonably good shape’ despite unsatisfactory retail data — JP Morgan

While the NBS states that companies are optimistic regarding future retrieval, analysts warn that additional headwinds lie ahead for the country’s factories. They say that pent-up requirement is set to wane, while floods in Chinese provinces, considered the worst in decades, may disrupt economic activity.

A resurgence of coronavirus from the country could create another hurdle. Chinese health authorities declared 127 new coronavirus cases on Thursday, up from 105 the former day. This is the highest daily number since March.

The retrieval of the world’s second biggest market comes as some top states are reporting sharp contractions. US gross domestic product (GDP) shrank by 32.9 percent from the next quarter, marking the sharpest decline on record. During the same interval, Germany’s market contracted by 10% and France’s market shrank by 13.8 percent.

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