China Caixin PMI Signals Return to Growth in Manufacturing Sector
A private gauge of China's manufacturing activity bounced back into expansionary territory in June, as Beijing and Washington reached a temporary trade truce that has lifted some pressures on Chinese factories.
The Caixin manufacturing purchasing managers index rose to 50.4 last month from 48.3 in May, according to data released Tuesday by Caixin Media Co. and S&P Global.
A reading above 50 suggests an expansion in activity, while a reading below suggests contraction.
June's improvement was supported by recovering supply and demand, with both manufacturing production and sales returning to growth after a brief decline in the previous month, according to Caixin.
Efforts by Chinese manufacturers to promote sales helped push total new orders back to expansion, with the subindex for output rebounding by more than four points and moving back into expansionary territory, Caixin said.
However, external demand remained weak, said Wang Zhe, senior economist at Caixin Insight Group. "Exports of consumer goods remained under particular pressure in the fallout of additional U.S. tariffs, causing new export orders to contract for a third straight month," Wang added.
Employment also declined last month amid weakening business optimism, as factories continued to prioritize cost control. The job market indicator remained in contractionary territory for the ninth time in the past 10 months, according to Caixin.
While noting that earlier policy support from Beijing has helped stabilize the economy, Caixin's Wang cautioned that the world's second-largest economy still faces a challenging external environment with rising uncertainties, and that domestic demand remains insufficient.
Private data released Monday showed China's yearslong property slump is far from over.
Total value of new-home sales from the 100 largest property developers fell 23% in June from a year earlier, according to data from China Real Estate Information Corp.
"While some of the existing stimulus policies may have front-loaded short-term consumption, unleashing consumption potential in the long term still relies on aspects including stabilizing employment, reinforcing confidence, and increasing incomes," Wang said.
Tuesday's reading compares with a competing official gauge which showed some improvement last month but still pointed to contraction. The official manufacturing purchasing managers index for June came in at 49.7, edging up from May's 49.5, marking a third straight month of decline.
The Caixin survey focuses more on China's smaller private companies and has often diverged from official gauges.
Source : Dow Jones Newswires
