Key facts
- China's official manufacturing PMI rose to 50.3 in June, up from 50 in May.
- The broader composite PMI, which includes the services sector, increased to 50.6.
- The rise in manufacturing activity was driven by a rebound in total new orders.
- Production continued to outpace demand, leading factories to remain cautious about hiring.
- The employment gauge in the manufacturing sector slipped to 48.5.
China's manufacturing sector experienced a slight expansion in June, with the official purchasing managers' index (PMI) rising to 50.3 from 50 in May. This uptick was supported by domestic stimulus measures and a perceived easing of trade tensions. The broader composite PMI, which encompasses both manufacturing and services, also saw an increase, reaching 50.6, its highest point this year.
The growth in manufacturing activity was primarily fueled by a rebound in total new orders. However, the data also indicated that production levels continued to outpace demand. This imbalance has led to a cautious approach from factories regarding hiring, as reflected by a slip in the employment gauge to 48.5.
The report highlights a persistent challenge of deflationary pressures, with tumbling factory-gate prices squeezing corporate profits despite the overall expansion in activity.