BY JOE CASH
BEIJING — China’s manufacturing activity shrank for a third straight month in June, though at a slower pace, as increases in new orders, purchasing volumes and supplier delivery times signalled that policy support rolled out since late last year is taking effect.
But business sentiment remains subdued, Monday’s survey showed, with employment, factory gate prices and new export orders still languishing, and keeping alive calls for even more stimulus as authorities deal with US President Donald Trump’stariff onslaught and chronic weakness in the property sector.
The National Bureau of Statistics purchasing managers’ index (PMI) rose to 49.7 in June from 49.5 in May, matching the median forecast in a Reuters poll but remaining below the 50-mark that separates growth from contraction.
“Two months of successive improvement, that’s a decent reading given June was the first full month without Trump’s prohibitive 100 percent-plus tariffs,” said Xu Tianchen, senior economist at the Economist Intelligence Unit.
“There is still evidence of frontloading in trade, but the tariffs are lower now and manufacturers are preparing to ship holiday season goods,” he added.
The new export orders sub-index remained in contraction for a 14th straight month in June, inching up to 47.7 from 47.5 in May, while employment diverged from other indicators by deteriorating further. However, new domestic orders rose to 50.2 from 49.8, and purchasing volumes jumped from 47.6 to 50.2 — offering policymakers some hope that domestic demand may be starting to recover.
Zichun Huang, China economist at Capital Economics, said the PMIs suggested the world’s second-largest economy had regained some momentum over the past month, but warned tensions with the West would continue to squeeze its exports and there were still signs of deflationary pressures.
The non-manufacturing PMI, which includes services and construction, grew to 50.5 from 50.3.
Activity in the food and beverages, travel, hospitality and logistics sectors fell this month, NBS senior statistician Zhao Qinghe said in a statement. However, this drag was offset by a pickup in the construction PMI, which rose to a 3-month high of 52.8, Capital Economics’ Huang said.
