China Factory Activity Surprises With First Slump in Five Months

• BAC +0.36%

(Bloomberg) -- China's factory activity unexpectedly contracted for the first time in five months, adding to signs of slowing economic momentum.

Most Read from Bloomberg

• Chip Stocks Post Biggest Advance Since April 2025: Markets Wrap

• US Strikes Iran Again as Conflict Spreads Across Middle East

• Bond Yields at 19-Year High Send Warsh Credibility Warning

• Warner Bros. Deal Collapse Would Cost the Ellisons $9.8 Billion

• Microsoft's $450 Billion Jump Is Biggest in Stock Market History

The official manufacturing purchasing managers' index was 49.2 in July, versus 50.3 in June, the National Bureau of Statistics said Friday. The median estimate of economists surveyed by Bloomberg was 50.1.

The non-manufacturing measure of activity in construction and services fell more than forecast to 49 — the lowest since December 2022 — from 50.2 last month, the statistics office said. A reading below 50 indicates contraction.

The declines suggest economic weakness is becoming more entrenched, with soft domestic demand outweighing resilience in exports. Investors are increasingly focused on whether policymakers will roll out stimulus measures to stabilize the economy after the government dialed back spending on infrastructure in recent months.

Concerns over the health of China's economy have been intensifying since April as growth weakened and became more unbalanced. Though the energy shock unleashed by the war in Iran has helped drag China out of its yearslong deflation, consumer and business confidence is still sluggish.

Economic growth slowed to 4.3% in the second quarter from 2025, the weakest quarterly growth in more than three years. But a strong first quarter means that growth in January-June was 4.7%, within this year's official target range of 4.5% to 5%.

Top officials pledged to "roll out pragmatic and effective new policies in a timely manner" during a key policy meeting on Thursday.

With exports soaring at a double-digit pace this year, economists had expected officials to act with little urgency for now in rolling out any fresh stimulus measures. Policymakers also pledged to speed up the pace of public spending and the use of funds raised through government bonds.

Most Read from Bloomberg Businessweek

• How a Few Hundred Dollars Could Manipulate Election Prediction Markets

• Canada's MAGA-Friendly Premier Advances Her Pro-Oil Agenda

• The Bitcoin Slump Is Crushing Companies That Stockpiled Tokens

• The AI Industry Is Trying to Fix Its Image Problem

©2026 Bloomberg L.P.

The Menopause Gold Rush Is Failing Women