Staff of Reuters 3 minutes * Manufacturing PMI at 50.9 in June vs. 51 in May (poll 50.8)* Non-manufacturing PMI at 53.5 vs. 55.2 in May* Composite PMI at 52.9 vs. 54.2 in May BEIJING, June 30 (Reuters) – China’s economy is expected to grow at a faster pace than the rest of the world Higher raw material costs, a global shortage of semiconductors, and a revival of COVID-19 cases in the main export region of Guangdong impacted on China’s industrial activity, which fell to a four-month low in June. The official manufacturing Purchasing Manager’s Index (PMI) fell to 50.9 in June from 51.0 in May, according to statistics released on Wednesday by the National Bureau of Statistics. It did, however, beat analysts’ expectations for a drop to 50.8 percent. On a monthly basis, it remained above the 50-point threshold that distinguishes growth from contraction. The world’s second-largest economy has mostly recovered from the COVID-19 pandemic’s disruptions, but Chinese firms are facing new obstacles ranging from increasing raw material costs to global supply chain constraints. Shipments have also been interrupted due to a coronavirus outbreak in China’s important export region of Guangdong. On Wednesday, factory output in South Korea and Japan unexpectedly slowed, owing in part to production bottlenecks in the auto sector caused by chip shortages. The sub-index for production fell to 51.9, a four-month low, from 52.7 the previous month, according to China’s official PMI, which focuses primarily on large and state-owned businesses. New orders, on the other hand, increased when the economy recovered. In June, however, new export orders decreased for the second month in a row, and at a higher rate. The slowdown in output, according to Zhao Qinghe, a senior statistician at the NBS, is due to constraints such as a scarcity of semiconductors, insufficient coal supply, a power shortfall, and equipment maintenance. Global demand should begin to rebound more quickly as several governments scale up immunization programs. Pandemic-driven stimulus measures, on the other hand, might raise global inflation and exacerbate China’s massive industrial sector’s troubles. The Chinese government has stated that any unjustified increases in commodities prices will be curtailed. The state planner has begun probes into the markets for coal, iron ore, and fertilizer, causing prices to fall. In June, a sub-index for raw material costs in the official PMI was 61.2, down from 72.8 in May. According to a separate NBS survey, the official non-manufacturing Purchasing Managers’ Index (PMI) dipped to 53.5 in June from 55.2 in May. (Colin Qian, Stella Qiu, and Ryan Woo contributed reporting; Jacqueline Wong edited the piece.) Continue reading
