China’s economic recovery continued in June, with activity in both the manufacturing and services sectors expanding for the first time since February. The official manufacturing purchasing managers’ index (PMI) rose to 50.2 in June, up from 49.6 in May and marking the first time since February it rose above the 50 mark that separates expansion from contraction. The official non-manufacturing PMI, which measures business sentiment in the services and construction sectors, rose to 54.7 from 47.8 in May, also expanding for the first time since February. China's private Caixin/Markit Manufacturing PMI rebounded back into the expansion territory of 51.7 in June, up 3.6 points from May, and beating market expectations of 50.1.
Signs of recovery had emerged in June as key indicators for manufacturing and consumption improved marginally in May. China’s industrial profits, though, continued their steep decline in May with coronavirus restrictions still weighing on factory production and squeezing manufacturing margins, while pressure on the labor market also persisted.
People's Bank of China (PBOC) Governor Yi Gang reiterated that China’s economy continues to face downward pressure due to the pandemic, along with external shocks, while also noting inflation is largely stable. Beijing has continued support for the nation’s economic recovery to stem the risks of an economic downturn, but the impact of stringent coronavirus controls, including the lockdown of Shanghai, has dragged down growth in the second quarter and threatens the target of “around 5.5%” growth this year, the South China Morning Post reports.
China’s foreign trade is expected to post stable growth this year, despite unprecedented challenges, including high raw material costs and fierce competition from Southeast Asian countries, analysts and trade experts said. The profitability of exporters in most sectors has improved during the second quarter, according to a survey by the China Council for the Promotion of International Trade (CCPIT) in Beijing. “It is worth noting that trade data got better not only from quarter to quarter, but also from month to month during the second quarter. June is likely to have witnessed a strong foreign trade rebound and more energetic economic recovery,” said Liu Ying, Researcher at the Chongyang Institute for Financial Studies at Renmin University of China. The survey showed more than 25% of enterprises registered positive quarter-on-quarter revenue growth, while nearly 20% said they have secured profit growth from a quarter ago. More than 26% of the respondents are confident about year-on-year revenue growth, and about 28% said they expect their revenues to be at least the same as last year. Liu predicted that China’s foreign trade is likely to exceed CNY40 trillion this year, the China Daily adds.
