China’s official July PMI edged up by 0.3 to 49.7 month-on-month — the third month in a row that it stands below 50. Typically, a PMI above 50 represents an expansion, while a reading under 50 reflects a contraction.
Large-enterprise PMI stood at 50.7 in July, up from 49.9 in June. Medium-size enterprises and small enterprises saw their PMIs remain below 49. The non-manufacturing PMI fell to 53.7 in July from 54.2 in June, according to data from the National Bureau of Statistics.
The new orders and new export orders sub-indices rose slightly last month to 49.8 and 46.9, respectively, from 49.6 and 46.3 in June.
“The reading was slightly above market consensus and our forecast of 49.6,” Ting Lu, chief economist at Nomura Holdings, wrote in a Wednesday note. “Looking at the detail, we see that the July rise in the official manufacturing PMI was mainly driven by the production sub-index, which rose to 52.1 in July from 51.3 in June.”
Meanwhile, Caixin manufacturing PMI rose to 49.9 in July from 49.4 in June. The production sub-index increased by 1.1 to 50.1, and the new orders sub-index edged up to 50.2 from 48.8.
The raw material inventories sub-index was 0.4 lower at 49.8, and the finished goods inventory index fell 0.7 to 48.5. Both suggested a “destocking” trend, Maggie Wei, China economist at Goldman Sachs, wrote in a Thursday report.
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China’s aggregate financing to the real economy in the first half of 2019 reached Rmb13tr, according to a Monday report by the central bank.
Jiangsu, Guangdong and Zhejiang were the top three provinces in terms of providing financing to the real economy, reaching Rmb1.6tr, Rmb1.45tr, and Rmb1.12tr, respectively.
Renminbi loans accounted for more than 70% of the aggregate financing amount while foreign currency-denominated loans took up less than 0.2%.
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Nomura Holdings is set to open its China JV by the end of the year, and has already selected its management team, according to local media Caixin.
The JV will be called Nomura Orient International Securities. It will be held jointly by Nomura and Shanghai-based Orient International Co.