Key facts
- China's manufacturing PMI rose to 50.3 in June, returning to expansion territory.
- The non-manufacturing PMI increased to 50.2 in June, marking a second consecutive month of expansion.
- New orders and production sub-indices showed expansion.
- Exports, particularly AI-related hardware, were a key driver of manufacturing growth.
- Domestic demand and consumer caution remain concerns.
China's factory activity picked up pace in June, with the official manufacturing purchasing managers' index (PMI) expanding to 50.3 from 50.0 in May, according to the National Bureau of Statistics. This return to expansion was driven by robust exports, particularly for artificial intelligence hardware, while domestic demand remained subdued. The non-manufacturing PMI also rose to 50.2 in June, indicating continued expansion in the services and construction sectors. The composite PMI, combining both manufacturing and non-manufacturing activity, increased to 50.6 from 50.5 in the prior month.
The sub-index for new orders climbed to 51.2 in June from 49.9 in May, and the production sub-index expanded to 51.4 from 51.2. Despite these positive signs, some economists cautioned that Chinese consumers remain cautious due to the prolonged property sector downturn, leading to sluggish domestic demand. External demand is seen as the primary engine for China's manufacturing growth.