China’s June Factory Activity Falls for Third Straight Month – PMI

Reuters

11:17 JST, June 30, 2023

BEIJING, June 30 (Reuters) – China’s manufacturing activity contracted for a third straight month in June, albeit at a slower pace, an official factory survey showed on Friday, as pressure builds for policymakers to release more stimulus to shore up weak demand.

The official purchasing managers’ index (PMI) was at 49.0 from 48.8 in May, according to data from the National Bureau of Statistics, staying below the 50-point mark that separates expansion from contraction. The outcome was in line with a forecast of 49.0.

Analysts have begun downgrading economic forecasts for China’s economy for the rest of the year, after May industrial output and retail sales data missed expectations, a sign the post-pandemic recovery seen in the first quarter was losing steam.

Nomura has been the most bearish, cutting its forecast for growth in China’s gross domestic product (GDP) this year to 5.1% from 5.5%. That downgrade even takes into account the prospect new stimulus.

The government has set a modest GDP growth target of about 5% for this year after badly missing its 2022 goal.

China’s cabinet this month pledged to promote a sustained economic recovery “in a timely manner.”

Addressing a World Economic Forum summit in Tianjin on Tuesday, China’s Premier Li Qiang reiterated that Beijing will take steps to boost demand, but stopped short of unveiling any concrete policies.

Sources involved in policy discussions have told Reuters that China will roll out more stimulus measures to support the economy, but concerns over debt and capital flight will keep measures aimed at shoring up weak demand in the consumer and private sectors.

The official non-manufacturing PMI fell to 53.2 from 54.50 in May, its weakest reading since December.

The composite PMI, which includes both manufacturing and non-manufacturing activity, dropped to 52.3 from 52.9.