China’s manufacturing activity expanded at a slower pace in June as companies turned more cautious about their output outlook, according to a private survey.
(Bloomberg) — China’s manufacturing activity expanded at a slower pace in June as companies turned more cautious about their output outlook, according to a private survey.
The Caixin manufacturing purchasing managers index hit 50.5 last month, easing from 50.9 in May. Economists polled by Bloomberg had predicted the index to hit 50 — the line separating expansion from contraction.
The Caixin survey covers mainly smaller and export-oriented businesses as compared to the the official PMI, which last week showed manufacturing activity remaining in contractionary territory for a third straight month.
The data adds to evidence that China’s economic recovery is cooling, with recent figures also showing weakness in everything from consumer spending to the housing market, exports and infrastructure investment.
“A slew of recent economic data suggests that China’s recovery has yet to find a stable footing,” Wang Zhe, senior economist at Caixin Insight Group, said in a statement accompanying the survey results Monday.
Stronger macro policy support and more efficient implementation from a micro perspective are needed, he added.
Read: China Growth Momentum Slows Further Amid Calls for Stimulus
What Bloomberg Economics Says …
Exports in May underlined tough conditions for external-demand-oriented businesses — falling 7.5% below the year-earlier level, when shipments were hit by the Shanghai lockdown. The second half of the year looks set to be challenging. PMIs for the U.S., euro area and Japan showed their manufacturing sectors contracted in June.
— Chang Shu and Eric Zhu, economists
Read the full report here.
The Caixin report also showed manufacturers cut headcount for the fourth consecutive month due to weaker-than-expected sales and efforts to readjust capacity. That bodes ill for the country’s job market, which has already seen the youth jobless rate surge to an all-time high.
Deflationary pressure is rising, as input costs fell in June at the fastest pace since January 2016, while firms reduced selling prices due to increased competition. Optimism in the 12-month outlook for production waned to an eight-month low, as some companies expressed concern over relatively sluggish market conditions.
China’s National Bureau of Statistics is slated to publish inflation data for June on July 10.
(Updates with more detail.)
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