"Overall, economic conditions in the second quarter were considerably weaker than in the first quarter, which means there has been no easing of the downward pressure on growth".
-Zhengsheng Zhong, CEBM Group
Manufacturing sector in the world's second-largest economy fell to a four-month low in June, suggesting there remains downward pressure on China. The government's manufacturing Purchasing Managers' Index, a survey that tracks the health of large and state-owned companies, came in at 50.0 last month, versus 50.1 recorded in May and April. The report was in line with average estimation and marked the weakest result since February's 49.0 figure. In the meantime, Caixin's China June manufacturing PMI, which tracks smaller-scale private firms compared to the official gauge, also recorded the fastest rate of deterioration in four months. The index reported a 48.6 reading for June, compared with 49.2 in May, that is well under expectations for a reading of 49.1 Index readings under 50 signal contraction in manufacturing activity from the previous month, whereas a reading above that level indicates an expansion. Meanwhile, activity in China's services sector picked up in June. Non-manufacturing PMI was at 53.7, compared with 53.1 in May.
The latest numbers are likely to trigger a debate on whether more monetary support can be expected from the People's Bank of China, especially given tepid expectations for second quarter growth.
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