China manufacturing momentum cools; new orders return to growth
Input stockpiling hits longest run since 2007 as firms rein in purchasing
China's manufacturing sector expanded for an eighth consecutive month in July, though the pace of growth slowed as easing cost pressures allowed firms to hold output prices steady, according to the latest RatingDog China General Manufacturing PMI survey.
The headline index eased to a four-month low of 50.9 in July, down from 51.7 in June, though it remained above the 50.0 threshold that separates growth from contraction. The current expansion run is now the joint-longest in five years, matching the stretch from November 2023 to June 2024, with all five components of the index contributing positively for a second straight month.
New orders rose for a fourteenth consecutive month — the longest such run since 2018 — with firms citing stronger market demand, more international orders, new business channels and improved product quality, even as the pace of growth eased and new export business returned to growth after three flat months. Production likewise extended its expansion to eight months, though growth slowed to a four-month low following the strongest quarterly run of increases since mid-2024.
Manufacturers added jobs for a second straight month, with the rate of hiring the fastest since August 2023, driven by rising orders, higher output and greater use of temporary staff. Backlogs of work grew for a sixth consecutive month, albeit at their slowest pace over that run, whilst finished goods inventories dipped slightly.
Despite the rise in new orders and backlogs, firms cut back on purchasing for the first time since November 2025, as stocks of purchased inputs kept building for an eighth straight month — the longest such streak since 2006-07. Supplier delivery times lengthened for a fifth month running, though only marginally.
On pricing, output charges were broadly flat in July after six consecutive months of increases, the longest such run since 2021, as input cost inflation eased for a third straight month to its weakest since January.
Yao Yu, founder of RatingDog, said the survey pointed to a slower pace of improvement across sub-indices even as new orders extended their longest growth run since 2018 and export orders returned to expansion. Yao noted that the renewed dip in purchasing activity and continued build-up of input stocks warranted attention, but said the PMI was expected to stay in expansionary territory in the near term, albeit at a more moderate pace, with business confidence about the year ahead improving slightly on hopes of stronger demand, new products and expanded capacity.
