Factory activity in China fell for the third time in June, while non-manufacturing activity was at its weakest since Beijing abandoned its strict “zero Covid” policy late last year.
The latest data point to a patchy recovery in the world’s second largest economy as growth momentum slows.
The official purchasing managers’ index (PMI) for manufacturing came in at 49.0 in June — compared to 48.8 in May and 49.2 in April — according to data from the National Bureau of Statistics released on Friday. The June value corresponded to the mean forecast of a Reuters poll.
Friday’s figures also showed that China posted its weakest official non-manufacturing PMI this year, reading 53.2 in June – compared to 54.5 in May and 56.4 in April. A PMI reading above 50 indicates an expansion in activity, while a reading below this level indicates a contraction.
“The economic momentum in China is still quite weak. Recent data shows that the global economy is slowing, which is likely to put further pressure on foreign demand in the coming months,” said Zhang Zhiwei, president and chief economist of Pinpoint Asset Management.
“On the other hand, the government’s growth target of 5% this year is quite modest given last year’s low base. It’s not clear whether the weak economic data would prompt the government to embark on aggressive stimulus measures any time soon,” he added.
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The Hang Seng Index and the CSI 300 index reversed losses, rising slightly in early Friday trade following the release of the PMI data. The Chinese yuan The exchange rate hit its weakest reading against the US dollar since mid-November, despite a stronger-than-expected mean fix from the central bank – the fourth this week as the PBOC tries to stem the currency’s weakness.
Important meetings are coming up
Chinese Premier Li Qiang said Tuesday his country is still on track to meet its annual growth target of around 5% — a modest target after China grew just 3% last year, one of its weakest numbers in almost half a century.
Market observers await the next steps from a July Politburo meeting at which Communist Party leaders will review the country’s economic performance in the first half of the year.
China’s State Council pledged in mid-June to take timely “more energetic measures” to increase the momentum of economic development, optimize the economic structure and promote a sustainable recovery.
Official data from June 30, 2023 shows that factory activity in China fell for a third month in June. Weak economic data out of China in April and May have fueled calls for stimulus for the world’s second largest economy.
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