China’s factory activity slows in June, with economic recovery ‘yet to find a stable footing’

Caixin/S&P Global manufacturing purchasing managers’ index (PMI) fell to 50.5 last month, down from 50.9 in May

Figure, combined with Friday’s official survey that showed factory activity extending declines, adds to evidence the world’s second-largest economy has lost momentum

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China’s Caixin/S&P Global manufacturing purchasing managers’ index (PMI) fell to 50.5 last month, down from 50.9 in May, data released on Monday showed. Photo: Xinhua

Published: 10:02am, 3 Jul 2023Updated: 10:32am, 3 Jul 2023

China’s factory activity growth slowed in June, a private sector survey showed on Monday, with sentiment waning and recruitment cooling as firms grew increasingly concerned about sluggish market conditions.

The Caixin/S&P Global manufacturing purchasing managers’ index (PMI) eased to 50.5 in June from 50.9 in May, indicating a marginal expansion in activity. The 50-point index mark separates growth from contraction.

The figure, combined with Friday’s official survey that showed factory activity extending declines, adds to evidence the world’s second-largest economy lost momentum in the second quarter as demand weakened.

“In contrast to the official manufacturing PMI, the Caixin manufacturing index declined in June. Taken together, the average of the two is consistent with a slight deterioration in factory activity last month,” said Julian Evans-Pritchard and Sheana Yue, China economists at Capital Economics.

The Caixin manufacturing PMI surveys around 650 private and state-owned manufacturers and, according to economists, focuses more on export-oriented firms in coastal regions, while the official PMI surveys 3,200 companies across China.

The soft PMIs, which are considered a leading economic indicator, show China struggling to sustain the post-coronavirus recovery seen earlier this year amid an entrenched property downturn, high youth unemployment and deflationary pressures.