Covid-19, supply chain snags see China’s June factory activity grow at slowest pace in 15 months
- The Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) fell to 51.3 last month from May’s 52
- Although it marked the 14th month of expansion, it was below analyst expectations for only a slight slowdown to 51.8
China’s factory activity expanded at a softer pace in June, as the resurgence of Covid-19 cases in the export province of Guangdong and supply chain woes drove output growth to the lowest in 15 months, a private survey showed on Thursday.
A sub-index for output dropped to 51.0 in June, the lowest since March 2020, when the industrial sector started to rebound from Covid-induced paralysis. The growth in new orders also eased to a three-month low.
New export orders barely grew, compared with a robust expansion the previous month as rising Covid-19 cases across the world, especially of the more infectious Delta variant, took a toll on demand.
However, there are some bright spots in the private survey, which showed firms added to their payrolls at the fastest pace in seven months, as they ramped up efforts to increase capacity in the months ahead amid improved customers demand.
Inflationary pressures eased a bit, with input prices rising at slowest pace since November last year.
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“The manufacturing sector has gradually returned to normal,” said Wang Zhe, senior economist at Caixin Insight Group.
“In the second half of this year, the low base effect from last year will weaken. Inflationary pressure, coupled with the economic slowdown, is still a serious challenge for China.”
Julian Evans-Pritchard, senior China economist at Capital Economics, said the latest data added to signs momentum in the manufacturing sector was waning.
“The surveys point to a levelling off in demand and easing of price pressures, even as supply shortages continue to constrain output,” he said in a note.