China Factory Activity Sees Shock Contraction on Covid Outbreaks

In July, China's factory activity unexpectedly contracted, reversing earlier economic momentum.

The manufacturing purchasing managers index fell to 49 in July from 50 in June. The median estimate of economists was for a reading of 50.3

Anything below a reading of 50 indicates contraction.

The non-manufacturing gauge, which measures activity in the construction and services sectors, decreased in the last month. The forecast was below the actual number.

China's economic recovery has been fragile as the government relaxes curbs, but then tightens them again whenever there is a new outbreak. Concerns about disruptions to global supply chains were raised due to a flareup in Shenzhen.

China's economy grew at a slower pace in the second quarter than in the first, and economists think the full-year growth will be 4% or less.