Key facts
- China's non-manufacturing PMI increased to 50.2 in June, marking a second consecutive month of expansion.
- The official manufacturing PMI rose to 50.3 in June, returning to expansion territory.
- The composite PMI, combining manufacturing and non-manufacturing, rose to 50.6 in June.
- New orders improved significantly, signaling stronger demand, though remaining in contraction.
- Input and sales prices decreased, suggesting weaker pricing power.
- Business expectations improved, indicating increased optimism.
China's factory activity returned to expansion in June, with the official purchasing managers' index (PMI) rising to 50.3 from 50.0 in May, according to a survey by the National Bureau of Statistics. This marks a second consecutive month of growth for manufacturing.
Concurrently, China's non-manufacturing PMI also increased to 50.2 in June from 50.1 in May, indicating continued expansion in the services and construction sectors. The composite PMI, which combines both manufacturing and non-manufacturing activity, rose to 50.6 from 50.5 in the prior month, suggesting a broader stabilization of economic activity.
The survey revealed a significant improvement in new orders, reaching 48.0, which signals stronger demand, although this index remains in contractionary territory. Input prices decreased to 49.7, and sales prices eased to 48.4, indicating potential weakening of pricing power for businesses and easing inflationary pressures. The employment index edged up to 45.8, still reflecting a contraction in the labor market. However, business expectations improved notably to 55.3, reflecting increased optimism among businesses for the future.
Specific sectors within non-manufacturing that showed strong performance included telecommunications, internet software and IT services, financial services, and insurance. Conversely, air transport and real estate sectors remained below the 50-point expansion threshold.