Manufacturing activity in China fell sharply in July after being hit by high commodity prices causing demand to contract for the first time in more than a year.
The Caxin manufacturing PMI index released in the Asian session today, fell to its lowest level since April 2020 with a growth record of 50.3 in July from 51.3 recorded previously.
China’s economy has largely recovered from the disruption caused by the coronavirus pandemic, but it now faces new challenges such as higher raw material costs.
High product prices can lead to a decline in demand, especially for consumer goods and intermediate goods. This has led policymakers to step up efforts to curb rising commodity prices that have put pressure on producers.
Earlier, the market was hit with readings of Chinese manufacturing and non -manufacturing PMI data on Saturday, which also showed slower -than -expected growth.
China is also not neutral in the face of a resurgence of Covid-19 cases, of which a total of 382 new cases were reported in July, close to the number of cases reported in the previous five months.
As the rapidly contagious Delta variant continues to spread around the world, China is also facing increasing pressure to prevent the entry of the virus.