China July 2026 PMI Slips to 49.2% as Manufacturing Contraction Deepens

Manufacturing PMI Enters Contraction for Second Consecutive Month

China's official manufacturing PMI fell to 49.2 percent in July 2026, down from 50.3 percent in May and 50.4 percent in June, according to National Bureau of Statistics data released on July 31, 2026. The reading marks the second consecutive month of contraction and the lowest level since late 2024, signaling that industrial activity lost momentum entering the second half of the year.

PMI Data Trend

Sub-Indices Reveal Demand Weakness

Key sub-indices showed deterioration across the board. The new orders sub-index fell below 50 percent, reflecting softening domestic and export demand. The employment sub-index also slipped to 49.3 percent, suggesting companies are trimming headcount amid uncertainty. The production sub-index declined as firms responded to weaker order books. The new export orders sub-index faced additional pressure from renewed US tariff measures targeting Chinese goods.

Non-Manufacturing Holds Above 50 Percent

In contrast, the non-manufacturing PMI—covering services, construction, and retail—held firmly above the 50-percent expansion threshold at 50.2 percent, supported by robust government infrastructure spending and the early effects of consumption stimulus policies. This divergence between the services and manufacturing sectors underscores the uneven nature of China's economic recovery.

H2 2026 Outlook

The July PMI contraction raises the urgency for accelerated policy implementation in H2 2026. The Politburo has pledged to "take powerful measures" to stabilize the economy, with infrastructure investment and consumption subsidies expected to be the primary tools. Whether these measures can arrest the manufacturing slide and sustain overall GDP growth near the 4.7-percent H1 pace will be the defining policy challenge of the second half.

Source: National Bureau of Statistics of China, July 31, 2026.