Disappointing Emerging Asia July PMIs, but India remains an outlier

The region's PMIs remained weak, with the July prints showing a deterioration in China and across the region, with the exception of India. China's official NBS manufacturing PMI disappointed, edging down to 50.0, below market expectation and reaching a 5-month low.

The breakdown of the PMI also showed some worrying signs. The decline in headline PMI was driven mainly by a notable deterioration in new orders and production. Meanwhile, imports and new export orders both fell, reflecting weak demand conditions at home and abroad. 

"Employment conditions also remained weak, falling to 48.0, confirming corporates' muted expectations for demand. The input price index continued to decline, slumping to 44.7 (June: 47.3), a trend that is likely to exacerbate PPI deflation", says Barclays. 

This weaker official PMI, followed by a two-year low Markit final PMI, reveals continued downside risks to growth. GDP growth is forecasted at 6.8% y/y for the full year, which assumes stabilising property investment and stronger infrastructure investment in H2.