China’s Stumbling Manufacturing, Property Sectors Show Long Road to Recovery

The official manufacturing purchasing managers index pulled back to 49.0 in July from 50.2 in June, China’s National Bureau of Statistics said Sunday. The result left the index below the 50 level that separates expansion from contraction and short of the median forecast of 50.3 among economists polled by The Wall Street Journal.

Meanwhile, a nascent two-month recovery in China’s home sales ended in July as a widespread mortgage revolt over concerns that ailing property developers wouldn’t be able to deliver still-unfinished apartments weighed on demand.

Sales at the country’s top 100 property developers fell a sharp 39.7% in July from the same period last year to the equivalent of $77.6 billion, or 523.14 billion yuan, according to data released Sunday by China Real Estate Information Corp., a Shanghai-based real-estate data provider.

July sales were down 28.6% from June, ending a two-month recovery in month-to-month sales growth. Apartment sales showed increases in May and June from the previous months as activity picked up following long Covid-19 lockdowns in Shanghai and other Chinese cities earlier this year.

The results in manufacturing and real estate, itself accounting for one-third of China’s economy by some estimates, underscored how far the country remains from any semblance of postpandemic normalcy.

Although local governments across China have grown more adept at controlling Covid-19 outbreaks swiftly and with fewer disruptions than in previous months, Beijing has reaffirmed its commitment to strict zero-Covid policies for the foreseeable future.