China’s factory activity returns to growth in June despite global headwinds

BEIJING, June 30 — China’s factory activity picked up this month, official data showed today, providing a much-needed boost to authorities as Beijing battles to kickstart the domestic economy.

The manufacturing sector has faced uncertainty this year from the war in the Middle East, which has driven up global energy prices by disrupting shipping through the crucial Strait of Hormuz.

The headwinds add to existing challenges in the world’s second-largest economy, including lacklustre household spending and a years-long debt crisis in the vast property sector.

However, figures showed the manufacturing purchasing managers’ index (PMI), a closely watched gauge of industrial health, rose to 50.3 in June, above May’s 50.0 mark, which also separates expansion from contraction.

Economists surveyed by Bloomberg had predicted a reading of 50.1.

June saw “improved market demand”, particularly in electronics, special equipment and food processing, said Huo Lihui, a statistician at the National Bureau of Statistics, which released the data.

An index measuring new orders rose to 51.2 in June, the NBS figures showed, up from 49.9 in May.

However, Huo noted, there was “continued insufficient supply and demand” in areas including plastic products and ferrous metal smelting.

The non-manufacturing PMI — which monitors activity in sectors such as services and construction — rose to 50.2 in June from 50.1 in May.

That also slightly beat Bloomberg’s forecast of a narrow contraction.

Overall, the data represented “the best set of official PMI readings in 10 months”, wrote Julian Evans-Pritchard of Capital Economics.

But while this “suggests that China’s economy has regained some momentum lately”, he added that it remained “heavily dependent on exports and AI-related tech”.

“External demand remains the main engine of growth for China’s manufacturing sector.” — AFP