Unofficial China manufacturing PMI declined in July, with manufacturing momentum slowing

Overview

This report reviews China's unofficial manufacturing PMI performance in July 2026. The RatingDog China manufacturing PMI fell from 51.7 in June to 50.9 in July. Although it remained above the 50 expansion-contraction threshold, its simultaneous decline with the NBS manufacturing PMI pointed to slower growth in manufacturing activity.

Core views

The core view is that manufacturing expansion momentum weakened in July relative to June. New orders and output declined most notably, the employment subindex edged up, and the suppliers' delivery times subindex fell slightly. Among trade-related indicators, new export orders returned to expansion territory; in terms of inventories, raw material inventories were unchanged while finished-goods inventories declined. Price indicators continued to fall, with input prices remaining above output prices, suggesting that pressure on corporate profit margins may persist.

Analysis framework

The report uses a month-on-month comparison of the headline PMI and its major subindices, combined with the parallel movements of the NBS and RatingDog manufacturing PMIs, to assess marginal changes in manufacturing activity. It also uses the new orders, output, export orders, inventory, and price subindices to identify pressures related to demand, production, external demand, inventories, and profit margins.

Methodology notes

• High-frequency macro indicatorManufacturing PMI diffusion index

  The PMI uses 50 as the dividing line between expansion and contraction. An index above 50 generally indicates expansion in activity, while an index below 50 generally indicates contraction.

  This report evaluates marginal changes in China's manufacturing growth momentum by comparing the headline PMI and subindex movements in July and June.

• Price and margin analysisComparison of input and output price subindices

  Input prices reflect cost-side pressures, while output prices reflect changes in companies' selling prices. The difference between the two can be used to assess pressure on profit margins.

  The input price index remained above the output price index in July, leading the report to conclude that pressure on profit margins persisted.

Asset mapping & comparison

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

• China's macroeconomy

  The PMI is an important indicator for monitoring 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 subindices all declined from June.

  Comparison

  The RatingDog and NBS manufacturing PMIs both declined in July, moving in the same direction.

  Risks

  If demand continues to slow, manufacturing expansion could weaken further.

• Profit margins of Chinese manufacturing companies

  The difference between the input and output price subindices can reflect pressure on profit margins.

  Strengths

  The input price index declined, indicating some easing in cost pressures.

  Weaknesses

  The output price index declined more sharply, and input prices remained above output prices.

  Comparison

  Both price subindices declined from June in July.

  Risks

  If companies are unable to pass costs through to selling prices, pressure on profit margins may persist.

Key data

• RatingDog China manufacturing PMI50.9 in July 2026, 51.7 in June 2026The July reading was below June's, indicating slower manufacturing expansion.
• Goldman Sachs forecast and Bloomberg consensus estimateGoldman Sachs forecast: 50.5; Bloomberg consensus estimate: 52.0The actual reading of 50.9 was above Goldman Sachs' forecast but below the market consensus estimate.
• New orders index50.9 in July 2026, 52.7 in June 2026It recorded one of the largest declines among the major subindices.
• Output index51.5 in July 2026, 52.8 in June 2026The pace of expansion in production activity slowed.
• Employment index50.6 in July 2026, 50.5 in June 2026It edged up slightly.
• New export orders index50.2 in July 2026, 49.4 in June 2026It rose from contraction territory into expansion territory.
• Input price index51.7 in July 2026, 52.4 in June 2026Cost pressures continued to ease.
• Output price index50.1 in July 2026, 52.2 in June 2026It declined markedly, indicating weaker upward momentum in selling prices.

Impact & implications

The decline in the manufacturing PMI indicates a marginal slowdown in China's manufacturing growth momentum, which could affect market expectations for industrial production, corporate earnings, and the extent of macroeconomic policy support. The decline in the price subindices suggests easing inflation or cost pressures, but input prices remained above output prices, indicating that pressure on manufacturing companies' profit margins has not been fully resolved.

Risks

• Further declines in manufacturing new orders could weigh on subsequent production activity.
• Output prices weaker than input prices could put pressure on corporate profit margins.
• Although the PMI remained above 50, continued declines could lead the market to downgrade its assessment of economic momentum.
• The sustainability of the improvement in external demand remains to be observed.

What to watch

• Whether the NBS and RatingDog manufacturing PMIs continue to decline in tandem.
• Whether the new orders and output subindices can stabilize and rebound.
• Whether the improvement in new export orders proves sustainable.
• Whether the gap between input and output prices narrows, indicating easing pressure on profit margins.
• What inventory subindex movements signal about the future pace of production.