China's July PMI Weakness Likely to be Short-Lived
Dow Jones08-05
0743 GMT - The sharp declines in China's July manufacturing and services PMIs are likely to be temporary, as the weakness could prompt local authorities to ramp up spending, Capital Economics says in a note. Head of China economics Julian Evans-Pritchard says the weakness partly reflects a decline in domestic goods demand after construction activity slowed following a series of typhoons. However, CE says the drop isn't a cause for concern, noting that firms' expectations for future output remained resilient and employment indicators continued to reflect a stable labor market. Producers are also expecting stronger support from fiscal policy in the rest of the year, CE adds.
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