China composite PMI lower despite of outperforming services industry

The Caixin China PMI composite index, an indicator focusing on the privately-owned companies, dropped by 0.4pt to 50.2 in July, the lowest in more than one year. The decline was largely dragged down by weak manufacturing activities. The manufacturing PMI fell to 47.8 in July, down from 48.2 previously. Oppositely, the services PMI picked up to 53.8 from 51.8 in June, suggesting that the services industry continues to gain traction. 

China's July data will be released over the next few days, and analysts see that the activity indicators, including industrial production and fixed asset investment, will remain lukewarm. 

"For commodity currencies like Aussie and Kiwi the Chinese foreign trade data will be decisive. However, expectations for Chinese imports are already quite low with consensus estimates of -8% yoy", says Commerzbank.