China’s PMI declines for third month

BEIJING: China’s manufacturing activity contracted for the third consecutive month in June, signaling an uneven recovery for the world’s number two economy amid falling global demand and commodity prices, official data released on Friday showed.

The readings come as the government faces calls to unveil new measures to kick-start growth, which has slowed in the second quarter as the post-Covid lockdown rally fizzles out.

According to the National Bureau of Statistics, the official Manufacturing Purchasing Managers’ Index (PMI), a key indicator of manufacturing output, stood at 49.0, below the 50 mark separating expansion and contraction.

This is higher than the 48.8 recorded in May, and in line with the forecasts of economists polled by Bloomberg.

A contraction in manufacturing activity was offset by an expansion in services in recent months, but sluggish demand led to slower growth in June.

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.

Economic growth slowed sharply in April-June after the lifting of strict Covid rules late last year, while the yuan is at a seven-month low against the dollar as exports fall and weak domestic demand keeps inflation near zero.

There is increasing pressure on the authorities to intervene with stimulus, but apart from a few small cuts in interest rates and promises of action, nothing significant has come from Beijing.

The cabinet on Friday said it would “take effective measures to accelerate the pace of development, streamline the economic structure and promote a sustainable economic recovery … in a timely manner.”

But Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, said: “It’s unclear if weak economic data will force the government to take aggressive stimulus measures anytime soon.”

The government has set a modest economic growth target of around 5 percent for 2023, and Prime Minister Li Qiang said this week that he believes it will be met.