The results of a private survey released on Wednesday showed that China’s manufacturing activity expanded and exceeded expectations in June, reaching its highest level since December 2019.
The Caixin / Markit Manufacturing Purchasing Manager ratio reached 51.2. Economists polled by Reuters had expected 50.5, compared to 50.7 in May.
PMI readings above 50 indicate expansion, while those below this level indicate contraction. Monthly PMI readings are sequential.
“The manufacturing sector continued to expand as most of the country had the epidemic under control and the economy continued to recover,” said Wang Zhe, chief economist at Caixin Insight Group in a press release.
While overall manufacturing demand recovered quickly, overseas demand remained a drag, Wang wrote.
“New export orders continued to fall amid weak external demand, as the epidemic situation abroad remained uncertain in many places and the number of new daily infections remained high,” he said.
But overall demand “improved markedly,” he said. The sub-index for total new orders expanded for the first time since January, as the gradual lifting of epidemic control measures allowed production to resume.
Although supply and demand improved in June, the employment sub-index remained in negative territory for the sixth consecutive month and was even weaker than in May.
“Manufacturers were cautious about increasing procurement,” said Wang.
China said on Tuesday that manufacturing activity expanded in June with the official PMI at 50.9, but the country’s statistical office said there are still headwinds caused by the economic consequences of the coronavirus pandemic.
Capital Economics said the results of two surveys support the view that China’s GDP growth likely turned positive from a year ago in the second quarter.
“We continue to anticipate a stronger recovery in the coming quarters than analyst consensus,” said Martin Rasmussen, a China economist at the research firm.
The indicator of new export orders in the Caixin / Markit survey also improved, showing that export growth is stabilizing.
“One explanation is that the Caixin survey is more biased towards private companies, which tend to be over-represented in sectors such as textiles (including masks), electronic and medical products, sectors that have benefited from strong demand for related products. with COVID in the last few months, “Rasmussen wrote in a note after the survey results were released.
The private Caixin / Markit survey presents a larger mix of small and medium businesses. In comparison, the official PMI survey generally polls a large proportion of large companies and state-owned companies.
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