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China’s factory activity slows in June, manufacturers less optimistic: survey
Sluggish global economy dampens new orders for the country widely known as the world’s factory.
China’s manufacturing activity expanded for the second month running in June, albeit at a softer pace on sluggish business conditions, according to an industry survey released Monday.
The Caixin China General Manufacturing Purchasing Managers' Index (PMI) dipped to 50.5 last month from 50.9 in May, signalling a “marginal” improvement in the country’s manufacturing sector.
The mild improvement was mainly due to production growth slowing markedly from the 11-month high seen in May, the survey revealed.
The headline figure was also dampened by a soft increase in new orders, mainly driven by strong domestic sales as the sluggish global economy dampened foreign demand on China’s manufactured goods.
A reading above the 50.0 neutral mark indicates expansion from the previous month and below it signifies deterioration.
“A slew of recent economic data suggests that China’s recovery has yet to find a stable footing, as prominent issues including a lack of internal growth drivers, weak demand and dimming prospects remain,” said Wang Zhe, senior economist at Caixin Insight Group.
“Problems reflected in June’s Caixin China manufacturing PMI, ranging from an increasingly dire job market to rising deflationary pressure and waning optimism, also point to the same conclusion,” he added.
The survey showed how the weak demand affected the sector’s pricing power and hiring activities.
Chinese manufacturers were pressured to trim their selling prices last month to boost sales amid tight market competition.
The subindex for employment fell below the 50 neutral mark in June, marking the fourth straight month of deterioration as a result of manufacturers adjusting production capacity.
For the next 12 months, Chinese enterprises were generally optimistic on the health of the manufacturing sector on expectations of stronger sales and a better economic landscape.
The degree of optimism, however, was the lowest in eight months since there are some companies that are still concerned over sluggish business conditions.
