China’s Manufacturing Keeps Shrinking, Weighing on Recovery

China’s manufacturing activity contracted for a fourth month in July while non-manufacturing activity expanded slower than expected, showing the economy’s recovery remains under pressure.

The official manufacturing purchasing managers’ index rose to 49.3, according to data from the National Bureau of Statistics on Monday, from 49 in June and beating the median estimate of 48.9 in a Bloomberg survey of economists.

The non-manufacturing gauge — which measures activity in the services and construction sectors — eased to 51.5 from 53.2 in June. That was weaker than the reading of 53 expected by economists. A reading below 50 signals contraction from the previous month, while anything above points to expansion.

Adding to existing strains on China’s economy is extreme weather, with heat waves baking northeastern cities including Beijing and spreading to central coastal regions, while the southwest has been hit by heavy rain and deadly floods. The weather problems threaten to put stress on the energy grid and disrupt logistics, as well as production.

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