China Caixin PMI manufacturing June: 50.4 (est 49.3; prev 48.3)

China Caixin PMI manufacturing June: 50.4 (est 49.3; prev 48.3)

China's manufacturing sector continues to face headwinds as the manufacturing purchasing managers index (PMI) contracted for the third consecutive month in June, according to data from the National Bureau of Statistics (NBS). The PMI reading of 49.7 in June was slightly better than expectations of 49.6 and improved from the 49.5 seen in May [1].

The contraction in the manufacturing sector is attributed to sluggish overseas demand, particularly from the United States, amidst relatively high trade tariffs. However, the slight improvement from the previous month indicates some improving conditions for local manufacturers following the U.S.-China trade deal in May [1].

In contrast, China's non-manufacturing PMI grew at a faster pace in June, rising to 50.5 from 50.3 in May, which was above market expectations. This indicates tepid growth in services and construction sectors, supported by increased government support and regional holidays [2].

The composite PMI, which includes both manufacturing and non-manufacturing sectors, improved to 50.7 in June from 50.4 in May, marking the highest level since March. The NBS noted that overall economic activity gained momentum despite persistent internal and external challenges [2].

The Shanghai Composite Index rose 0.2% to around 3,430 on Monday, snapping a two-day losing streak, as weak manufacturing data fueled expectations of additional stimulus measures. The offshore yuan strengthened to around 7.16 per dollar on Monday, recouping losses from the previous week [2].

Markets are now awaiting Tuesday’s Caixin PMI data for further insight into private-sector momentum. The Caixin PMI for manufacturing in June is estimated at 50.4, up from 48.3 in May, according to market consensus [1].

References:
[1] https://www.investing.com/news/economic-indicators/china-manufacturing-pmi-shrinks-in-june-as-tariff-headwinds-persist-4116105
[2] https://seekingalpha.com/news/4463527-chinas-manufacturing-pmi-contracts-for-third-consecutive-month-in-june-to-497-services-growth-at-3-month-peak