China’s factory activity picked up in June, but remained in contraction for a third straight month amid an overall slowing economic recovery, while expansion in the non-manufacturing sectors slowed in June. The official manufacturing purchasing managers’ index (PMI) rose to 49 in June, up from 48.8 in May, according to the National Bureau of Statistics (NBS). The 50-mark separates growth from contraction on a monthly basis. The subindex for new orders rose to 48.6 from 48.3 in May, while new export orders slipped to a five-month low of 46.4. The official non-manufacturing PMI, which measures business sentiment in the services and construction sectors, fell to 53.2 in June from 54.5 in May. China’s economic recovery has recently been hit by rising youth unemployment as well as disappointing retail sales and industrial production. The official composite PMI, which includes both manufacturing and services activity, fell to 52.3 in June, from 52.9 in May.
Within the non-manufacturing index, the services subindex fell to 52.8 in June from 53.8 in May, while the construction subindex fell to s six-month low of 55.7 from 58.2. “Economic momentum is still quite weak in China. Recent data shows the global economy is slowing, which will likely put further pressure on external demand in the coming months,” said Zhang Zhiwei, President and Chief Economist at Pinpoint Asset Management. “On the other hand, the government’s GDP growth target of around 5% this year is quite modest given the low base last year. “It is not clear if the weak economic data would push the government to launch aggressive stimulus measures soon.”
At the World Economic Forum last week, Premier Li Qiang said that China’s second-quarter gross domestic product is expected to grow faster than the 4.5% seen in the first three months of the year. He also said Beijing was confident that China would reach its 5% annual growth target for 2023, while he also promised to launch “pragmatic and effective policies” to boost growth, the South China Morning Post reports.
