China's official NBS Manufacturing PMI dropped to 49.3 in July 2025 from June’s three-month high of 49.7, falling short of expectations and marking the fourth consecutive month of contraction in factory activity. It was the steepest decline since January, as output growth slowed (50.5 vs 51.0 in June), while both new orders (49.4 vs 50.2) and foreign sales (47.1 vs 47.7) saw their sharpest drops in three months. This suggests that a surge in exports ahead of higher US tariffs has begun to fade, while domestic demand remains sluggish. A similar pattern was observed in buying activity, which fell after rising in the prior month (49.5 vs 50.2). Meanwhile, employment decreased at a slightly softer pace (48.0 vs 47.9), and delivery times lengthened marginally (50.3 vs 50.2). On prices, input costs rose for the 1st time in five months (51.5 vs 48.4), while selling prices fell at the slowest pace in five months (48.3 vs 46.2). Finally, sentiment improved to a four-month high (52.6 vs 52.0).