Factory activity in China expanded in June at fastest pace in 13 months

An employee measures a newly manufactured ball mill machine at a factory in Nantong, Jiangsu Province, China, June 28, 2019. Photo taken by ball mill machine June 28, 2019. REUTERS / Stringer

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BEIJING (Reuters) – China’s manufacturing activity grew at its fastest in 13 months in June, a private sector survey showed on Friday, buoyed by a strong rebound in production, as the lifting of COVID-19 shutdowns pushed factories into a race to meet recovering demand. .

The Caixin/Market Manufacturing Purchasing Managers’ Index (PMI) rose to 51.7 in June, also indicating the first expansion in four months, from 48.1 the previous month. This was well above analyst expectations for a rise to 50.1.

The 50-point index mark separates growth and contraction on a monthly basis.

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The recovery suggested by the Caixin survey, which focused on more export-oriented companies and small businesses in coastal areas, was more convincing compared to the results reported in an official survey. Read more

The pace of economic activity accelerated in June since several COVID lockdowns were called off as COVID-19 cases declined, with a raft of support measures unveiled by the State Council in late May to gradually stabilize growth.

The production sub-index rebounded to its highest level since November 2020, while new orders, buoyed by the first increase in export orders in about a year, snapped three months of decline and posted the fastest growth in four months.

Delivery dates to suppliers stabilized in June amid easing supply chain hurdles, having worsened over the past two years.

However, despite the strong recovery, factories remained cautious about hiring more employees, with hiring falling for the third month in a row.

“The post-pandemic recovery process has remained the focus of the current economy, but its base has been far from strong,” said Wang Zhe, chief economist at Caixin Insight Group.

“The deterioration in household income and expectations caused by the weak labor market has dampened the demand recovery. In turn, supportive policies should target employees, temporary job workers and lower-income groups affected by the outbreak.”

The Chinese economy is beginning to chart a recovery path out of the supply shocks caused by the strict lockdown, but headwinds remain, including high unemployment in major cities, a still-weak real estate market, weak consumer spending and fear of any recurring waves of contagion. .

Analysts expect further improvement in economic conditions in the third quarter, although the official GDP target of around 5.5% for this year will be difficult to achieve unless the government abandons its zero-COVID strategy.

President Xi Jinping on Tuesday defended the policy of no-spreading of the novel coronavirus, saying that China is willing to accept some temporary impact on economic development at the expense of harm to people’s health.

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(Reporting by Stella Keough and Ryan Wu) Editing by Sam Holmes

Our Standards: Thomson Reuters Trust Principles.

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