China's factory activity completes strongest quarter since late 2020, private PMI shows

China's manufacturing sector expanded for a seventh straight month in June, completing its strongest quarter since late 2020 as output and new orders continued to rise, a business survey showed on Wednesday.

The RatingDog China General Manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global, eased to 51.7 in June from 51.8 in May but remained above analysts' forecast of 51.6. The 50-mark separates growth from contraction.

The average PMI reading for the second quarter was 51.9, the strongest for any quarter since the fourth quarter of 2020.

"Overall, the manufacturing sector maintained a steady expansion in June, supported by sustained new order growth, easing cost pressures and improved labour market conditions," said Yao Yu, founder at RatingDog.

An official survey released on Tuesday showed China's factory activity returned to expansion in June, driven by demand for chips, computers and other AI-related products.

Output rose for a seventh straight month, although the pace eased to a three-month low, according to the RatingDog survey.

Employment increased for the first time in three months, with job creation the strongest since August 2023. Work backlogs also rose for a fifth successive month, suggesting firms faced rising workloads despite higher staffing levels.

Overall new orders increased for the 13th consecutive month, matching the longest expansion streak since 2018.

New export business, however, fell for a second month. Export charges continued to rise but at the slowest rate since March.

Cost pressures eased further. Input prices rose for a 12th straight month but at the weakest pace since January, while output prices increased for a sixth consecutive month.

The economy showed increasing unevenness, with factory output and exports shoring up growth while household demand remained tepid.

Manufacturers surveyed remained optimistic about the year-ahead outlook, though confidence softened to its lowest since January.

Reuters

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