Economist Ho Woei Chen, CFA, of the UOB Group examines the Chinese economy’s latest PMI readings.
“The China Federation of Logistics & Purchasing (CFLPmanufacturing )’s and non-manufacturing Purchasing Manager’s Indexes (PMIs) both expanded for the 16th month in a row in June (defined as a reading >50). The unexpected decline in the non-manufacturing PMI is alarming considering hopes of a stronger recovery in the services sector in the second half of the year. COVID19 continues to be a major impediment to service recovery, as new infections are continuously being discovered, resulting in extensive testing and temporary travel restrictions.”
“The CFLP manufacturing PMI fell by 0.1 point to 50.9 in June (May: 51.0), but this is still significantly better than Bloomberg’s estimate of 50.8, primarily indicating a stable outlook in the manufacturing sector.”
“Production dropped to 51.9 from 52.7 in May, while new orders increased somewhat (51.5 from 51.3 in May). New export orders fell to 48.1 from 48.3 in May, while employment fell to 49.2 from 48.9 in May.”
“In June, the CFLP non-manufacturing PMI slipped 1.7 points to 53.5, significantly below consensus expectations (Bloomberg est: 55.3, May: 55.2). It’s the lowest it’s been since February.”/n
