Activity in China’s factories shrinks at slower pace in June, but job cuts mount
Data suggests world's second-largest economy is strengthening, but analysts believe the government may need to provide further stimulus measures to boost growth
China’s factory activity contracted for the fourth straight month in June but at a slower pace than in May, a private survey showed on Wednesday, offering signs that the economy may be slowly levelling out but is still in need of more support measures.
The HSBC/Markit Flash China Manufacturing Purchasing Managers’ Index (PMI) edged up to 49.4 from 49.2 in May, but it was below a preliminary reading of 49.6, and remained under the 50 mark which separates contraction from expansion.
After three months of falls, new orders returned to positive territory, but only just with a reading of 50.3, while new export orders also picked up from May.
But factories were forced to discount prices for their products at a faster rate as demand remained sluggish and firms cut staff levels at the sharpest pace since February 2009, a trend sure to alarm leaders in Beijing.
“The final reading of the HSBC China Manufacturing PMI pointed to a further decline in the health of the manufacturing sector in June,” said Annabel Fiddes, an economist at Markit.
“On the upside, there were some signs of improvement in total new orders and new export business, suggesting demand both at home and abroad is reviving. However, it is likely that more stimulus measures will be required to ensure that the sector can regain growth momentum and to encourage job creation.”