Mainland factories hit slower pace
The sharp growth in mainland manufacturing last month tapered off for the second consecutive month as a series of measures aimed at cooling the economy began having an impact, according to official statistics.
The purchasing managers' index slipped 1.2 percentage points to 54.5 per cent from 55.7 per cent in May, according to the latest monthly poll of about 700 firms conducted by the National Bureau of Statistics and China Federation of Logistics & Purchasing.
The latest findings showed continuous growth in mainland manufacturing, albeit at a lesser rate from the year-to-date peak of 58.6 per cent in April. A reading above 50 signals expansion in manufacturing activities and below 50 contraction.
'The government launched a series of measures such as tightly restricting investment in fixed assets, adjusting tax rebates on exports of energy-intensive, highly pollutant and resource-intensive products as well as tightening currency policies,' said Zhang Liqun, an economist at the State Council Development and Research Centre. The impact 'was probably shown in the June figures'.
He said the index on new export orders declined to the lowest level in four months, by three percentage points to 57.4 per cent last month while the imports index climbed for the first time in four months. However, it was too early to conclude this would became a trend, he said.
Separately, a purchasing managers' index compiled by brokerage firm CLSA showed continuing strength in manufacturing. The index hit a 27-month peak of 55 last month, up 0.9 percentage point from 54.1 in May. CLSA said exporters had urged buyers to place new orders before the introduction of new policies on export tax rebates on Sunday. The new policies could lead to an 8 to 15 per cent rise in export prices, it said.
'It will be interesting to see if the export order strength reverses over the summer as we expect it will,' CLSA chief economist Jim Walker said.