The purchasing managers’ index (PMI) for China’s manufacturing sector ended a three-month decline in June, an encouraging sign of improving factory activities and strengthening economic momentum.
The PMI came in at 49 in June, up from 48.8 in May, data from the National Bureau of Statistics (NBS) showed. A reading above 50 indicates expansion, while a reading below reflects contraction.
Among the 21 surveyed industries, 12 showed rising PMIs in June, up from 8 last month. According to NBS statistician Zhao Qinghe, this rise points to a better manufacturing climate.
The manufacturing activity is showing signs of bottoming out and picking up, Zhang Liqun, an analyst with the China Federation of Logistics and Purchasing, said.
According to the NBS data, both production and demand situations have improved. The production index returned to the expansion territory and the new order index, although still below 50, also logged an increase. Specifically, the automobile, railway and shipping equipment, and electric machinery sectors witnessed steady growth.
The burden on manufacturing businesses continued to ease as the proportion of respondents complaining of high raw material and logistics costs dropped for four straight months.
Large enterprises saw their PMI rise above the boom-and-bust line this month, and medium-sized businesses registered a higher index compared to May, although it is below 50. However, the reading for small firms has dropped in the contraction zone.
Major industries have maintained expansion as equipment and high-tech manufacturing picked up pace. Consumer goods manufacturers also reported stable performance.
Friday’s data also showed that the country’s non-manufacturing PMI stands at 53.2 this month as the service and construction sectors continued to see expansion. “The Chinese economy has maintained a recovery trend,” Zhao said.
Echoing Zhao’s views, Zhang said he believes that the overall economic recovery has seen stronger driving forces and a more solid foundation.
The Chinese economy has shown a clear momentum of rebound and improvement with a 4.5-percent GDP growth in the first quarter, and is expected to expand faster in the second quarter. It is on track to hit the growth target of around 5 percent set for the whole year.
However, analysts have cautioned against an increasingly complex external environment and slowdowns in global trade and investment. The Chinese authorities have pledged to ramp up policy support to tackle economic headwinds.
A State Council meeting on June 16 put forward a series of measures to promote a sustained economic recovery, including improving macroeconomic policies, expanding effective demand, strengthening and optimizing the real economy, and preventing and resolving risks in key fields.
The move has drawn a positive response and lifted market expectations. With the new pro-growth policies, the manufacturing PMI is expected to gradually return to the expansion zone in the second half of his year, Wang Qing, an analyst at Golden Credit Rating, said.
-Xinhua
