China Manufacturing Sector Rebounds In June

China Manufacturing Sector Rebounds In June

July 1, 2022

China’s manufacturing sector rebounded in June as the easing of the pandemic related containment measures boosted production and orders, survey results from S&P Global showed on Friday.

The Caixin manufacturing Purchasing Managers’ Index rose to 51.7 in June from 48.1 in May. A score above 50.0 indicates expansion.

Although the pace of growth was moderate overall, manufacturing activity expanded at the fastest pace since May 2021.

The official Purchasing Managers’ survey, released Thursday, also showed that the manufacturing sector returned to the expansion territory in June, with the index rising to 50.2 from 49.6 in May.

Manufacturers reported the first expansion of output since February, S&P said. Moreover, the rate of growth was the quickest seen since November 2020.

Likewise, total new orders returned to growth in June, though the rate of increase was only moderate. The return to more normal business conditions also helped to alleviate pressure on supply chains.

Employment declined for the third month in a row, with a number of firms linking this to the non-replacements of voluntary leavers as new business intakes were relatively subdued.

Purchasing activity rose moderately in June, reflecting the trend seen in new orders.

Input cost grew further in June due to higher costs for raw materials and transport. However, companies cut their selling prices for the second month in a row amid greater market competition and efforts to stimulate sales.

Business confidence regarding the 12-month outlook for output improved to a four-month high in June.

Restoration in the post-pandemic era remained the focus of the current economy, yet its base was far from strong, Wang Zhe, a senior economist at Caixin Insight Group said.

Deteriorating household income and expectations caused by a weak labor market dampened the demand recovery, Wang noted. Correspondingly, supportive policies should target employees, gig workers and low-income groups impacted by the outbreaks.

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