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Caixin PMI turns positive with more orders

MANUFACTURING activities in China expanded faster than expected in June despite lingering economic headwinds, a private report said today.

The Caixin China General Manufacturing Managers’ Index returned to the positive territory at 50.4, the highest in three months, according to the survey conducted by financial information service provider Markit and sponsored by Caixin Media Co Ltd.

That compared with May’s reading of 49.6 and market expectations for 49.5, according to a Reuters poll.

A reading above 50 indicates expansion, while a reading below reflects contraction.

New orders rose at the quickest pace in three months, help lifting the headline PMI.

Input and output prices both showed renewed increases though the inflation was cooler than the beginning of the year.

However, relatively muted client demand overall led manufacturers to reduce their inventory holdings and trim their workforce numbers again.

Optimism towards the business outlook edged down to its lowest level in 2017, the report said.

“The manufacturing sector recovered slightly in June, but based on the inventory trends and confidence around future output, the June reading was more like a temporary rebound, with an economic downtrend likely to be confirmed later,” said Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group.

The improvement in Caixin manufacturing PMI echoed with a pick-up of official PMI as the reading came in at 51.7 in June, up from May’s 51.2, the National Bureau of Statistics said last Friday.

Zhao Qinghe, a NBS statistician, said equipment manufacturing and high-tech manufacturing continued robust growth while some traditional industries including oil processing and coking as well as the nonmetal mineral products industry still face downward pressure.

Economists have expected the second quarter GDP to reach 6.8 percent on the stronger than expected manufacturing activities.


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