China's unofficial manufacturing PMI fell in July

Overview

This report reviews China's unofficial manufacturing PMI performance in July 2026. Goldman Sachs believes that both the RatingDog China Manufacturing PMI and the NBS Manufacturing PMI declined in July, indicating that manufacturing activity growth slowed from June. Although the indices remained in expansion territory above 50, the notable declines in the new orders and output subindices reflected weakening demand and production momentum.

Core views

The core view is that China's manufacturing activity cooled marginally in July. The RatingDog Manufacturing PMI fell from 51.7 to 50.9, with the new orders and output subindices posting the largest declines; the employment subindex edged up to 50.6, while the suppliers' delivery times subindex edged down to 49.6. Among trade-related indicators, new export orders improved to 50.2, but inventory and price indicators showed that companies continued to face some operating pressures. Input prices remained above output prices, suggesting that margin pressure may persist.

Analysis framework

The report compares the headline PMI and its major subindices, focusing on monthly changes in new orders, output, employment, suppliers' delivery times, new export orders, inventories, input prices, and output prices. It also cross-checks the results against the NBS Manufacturing PMI to assess the direction of manufacturing activity and price pressures.

Methodology notes

• High-frequency macro indicatorsManufacturing PMI analysis

  A PMI above 50 generally indicates expansion, while a PMI below 50 generally indicates contraction; subindices are used to decompose changes in demand, production, employment, inventories, and prices.

  This report assesses manufacturing conditions based on the concurrent movements of the RatingDog and NBS Manufacturing PMIs and evaluates corporate margin pressure through the difference between input and output prices.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• China's macroeconomy

  The PMI is an important leading indicator for assessing manufacturing conditions and economic momentum.

  Strengths

  The PMI remained above 50, and new export orders returned to expansion territory.

  Weaknesses

  The headline index, new orders, and output all declined from June, indicating slower growth in manufacturing activity.

  Comparison

  The RatingDog and NBS Manufacturing PMIs both declined in July, sending consistent signals.

  Risks

  If new orders continue to weaken, they could weigh on subsequent production, inventory adjustments, and corporate earnings.

• Profit margins of Chinese manufacturing companies

  The difference between the input and output prices subindices can reflect cost pass-through and margin pressure.

  Strengths

  Cost pressures continued to ease, with the input prices index falling from 52.4 to 51.7.

  Weaknesses

  The output prices index fell significantly from 52.2 to 50.1, while input prices remained above output prices.

  Comparison

  Price indices continued to decline in both PMI surveys.

  Risks

  If selling prices cannot keep pace with cost changes or demand weakens, margin pressure may persist.

Key data

• RatingDog Manufacturing PMI50.9July 2026; 51.7 in June, Goldman Sachs' forecast was 50.5, and the Bloomberg consensus was 52.0.
• New orders index50.9July 2026; 52.7 in June, with the largest decline among the major subindices.
• Output index51.5July 2026; 52.8 in June.
• Employment index50.6July 2026; 50.5 in June, representing a modest increase.
• Suppliers' delivery times index49.6July 2026; 49.7 in June, representing a slight decline.
• New export orders index50.2July 2026; 49.4 in June, returning above 50.
• Raw material inventories index50.7July 2026; unchanged from June.
• Finished goods inventories index49.7July 2026; 50.2 in June.
• Input prices index51.7July 2026; 52.4 in June, indicating that cost pressures continued to ease.
• Output prices index50.1July 2026; 52.2 in June, representing a relatively significant decline.

Impact & implications

For macroeconomic conditions and asset allocation, the decline in the manufacturing PMI suggests marginally weaker growth momentum in China's manufacturing sector, which could reduce market expectations for a recovery in industrial production and corporate earnings. The improvement in new export orders provides some support from external demand, but the declines in new orders and output remain the main negative signals. The decline in price subindices indicates limited inflationary pressure, but input prices exceeding output prices suggests that corporate margins may remain under pressure.

Risks

• Continued declines in the new orders and output subindices could further weaken manufacturing growth momentum.
• Input prices remaining above output prices could put further pressure on corporate margins.
• If the improvement in external demand proves unsustainable, the rebound in new export orders may provide less support to overall demand.
• PMI survey data may subsequently be revised alongside economic data or may diverge from other high-frequency indicators.

What to watch

• Whether the NBS and RatingDog Manufacturing PMIs continue to decline in tandem.
• Whether the new orders and output indices can stabilize and recover.
• Whether the improvement in new export orders proves sustainable.
• Whether the gap between input and output prices narrows, indicating a change in margin pressure.
• Changes in inventory subindices, particularly whether finished goods inventories remain below 50.