June PMI falls to April lows

According to data released yesterday by the China Federation of Logistics and Purchasing and the National Bureau of Statistics Service Survey Center, China’s Manufacturing Purchasing Managers’ Index (PMI) was 50.1% in June, which was a drop of 0.7 percentage points from the previous month and was the lowest level in four months. . The main sub-index has declined.

“The current economy still maintains the basic features of steady growth, but the economic trend is stable and weak.” According to the analysis of the China Federation of Logistics and Purchasing, in June, although various indices have declined, they have also shown some positive factors. Small business operations show signs of recovery. The small business PMI index was 48.9%, which was a rebound of 1.6 percentage points from the previous quarter. Social inventories are still decreasing. The finished goods inventory index continued to fall back to the 48.2% level. The purchase price index remained low and the business burden on enterprises was significantly reduced.

As for the stable and weak economic trends, Cai Jin, vice president of the China Federation of Logistics and Purchasing, explained that the main reason is overcapacity and production release. “The production index has been higher than the new orders index this year. In June, the production index was 52%, which was 1.6 percentage points higher than the new order index. This pattern of supply oversupply has now caused a weak market.” He said that in the current situation, steady growth should be based on controlling the release of excess production capacity and maintaining a basic balance between supply and demand.

Zhang Liqun, researcher of the Development Research Center of the State Council, said that the PMI index has fallen, and the major indicators have generally declined, indicating that there will be some downward pressure on the economy in the future. Steady growth policy effect is still further manifested. Taken together, economic growth is still in the stabilization process.

At the same time, the PMI index announced by HSBC yesterday was 48.2, down from last month (49.2) and the lowest in nine months. Among them, China's June HSBC manufacturing new orders index was 47.6, which was the lowest level in nine months.

“China's manufacturing industry is under pressure to reduce orders and increase inventory,” commented Qu Hongbin, chief economist at HSBC China.