Chinese PMIs still weak

From China’s NBS over the weekend:

The manufacturing purchasing managers’ index was unchanged from the previous month.

 In June , the manufacturing PMI was 49.4% , and the manufacturing boom was the same as last month. The main features of this month: First, the overall expansion of production, industrial transformation and upgrading continue to advance. The production index was 51.3% , although it fell 0.4 percentage points from the previous month , but continued to remain in the expansion range. Among the 21 industries surveyed , the production index of 13 industries is located in the expansion range. The production index of pharmaceutical, railway and ship aerospace equipment, refined food for food and beverage, electrical machinery equipment, computer communication electronic equipment, etc. is located at 54.0. A higher boom range above % . From the perspective of key industries, the production indices of high-tech manufacturing, equipment manufacturing and consumer goods industries were 55.6% , 53.3% and 52.2% , both of which rose from the previous quarter and were higher than the overall manufacturing industry by 4.3 , 2.0 and 0.9 percentage points. The production boom has shown steady and rising, indicating that in the current complex and volatile economic environment, the transformation and upgrading of the manufacturing industry continues to advance, and the promotion of economic growth by the medium and high-end manufacturing and consumer goods manufacturing industries is further enhanced. Second, the market order growth momentum is weak, and the foreign trade development environment is tightening. The new order index was 49.6% , down 0.2 percentage points from the previous month , and was in the contraction interval for two consecutive months. Among them, the new export order index reflecting external demand is 46.3%., 0.2 percentage points lower than the previous month . Third, due to the fluctuation of commodity prices at home and abroad and the changes in supply and demand in some industries, the price index both fell. The purchase price index and ex-factory price index of major raw materials were 49.0% and 45.4% , respectively, down 2.8 and 3.6 percentage points from the previous month , and some industry’s profit growth was affected. Fourth, the company’s expectations for recent market development are basically stable. The expected index of production and operation activities of enterprises is 53.4% , and 18 of the 21 industries surveyed are located in the expansion range. Among them, the expected index of production and operation activities of pharmaceuticals, railway and aerospace equipment and other manufacturing industries is located at a high level of 60.0% .

In terms of enterprise scale, the PMI of large enterprises was 49.9% , down 0.4 percentage points from the previous month ; the PMI of small and medium-sized enterprises was 49.1% and 48.3% , respectively, up 0.3 and 0.5 percentage points from the previous month , and the prosperity has rebounded.

Second, the non-manufacturing business activity index continues to be located in the higher economic range

 In June , the index of non-manufacturing business activities was 54.2% , which was 0.1 percentage points lower than that of the previous month . It remained at a higher economic range of 54.0% for six consecutive months , indicating that the non-manufacturing industry maintained a steady development trend.

The service industry has expanded steadily. The business activity index of the service industry was 53.4% , down 0.1 percentage point from the previous month . Since this year, the index has been in the boom range of more than 53.0% , the fluctuation is small, and the service industry has maintained steady and rapid growth. From the perspective of the industry, the business activity index of railway transportation, air transportation, telecommunications, banking, insurance and other industries is located at a higher economic range of 59.0% and above, and the total business volume is growing rapidly; road transportation, accommodation, catering, residential services and repairs When the business activity index of the industry is below the critical point, the total business volume has dropped. From the market expectation, the company is more optimistic about the recent market development. The service industry business activity expectation index is 60.3% , up 0.8 percentage points from the previous month . The 21 industries surveyed are all located in the expansion range. Among them, the expected activity index of retail, rail transport, air transport, catering, culture, sports and entertainment industries is higher than 62.0% , indicating that the industry related to summer consumption is more optimistic about the recent market development as the summer vacation approaches.

The construction industry has improved. The construction industry business activity index was 58.7% , a slight increase of 0.1 percentage points from the previous month , and the construction industry production activities have accelerated. In terms of market demand, the new order index was 56.0% , up 3.9 percentage points from the previous month and higher than the annual average of 1.3 percentage points, indicating that with the gradual landing of major infrastructure projects in the near future, the construction industry market demand is accelerating during the peak season. With the release, the number of newly signed engineering contracts has increased significantly.

Industrial economy shrinking. Building economy not great, either, but accelerating.

No surprises there.

David Llewellyn-Smith
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