China’s factory activity grew in June, according to data released Tuesday by the National Bureau of Statistics (NBS). The official manufacturing Purchasing Managers’ Index (PMI) registered at 50.3, an increase from 50.0 in May and moving above the 50-point mark that separates growth from contraction.
The June figure surpassed the median forecast of 50.1 from economists. The non-manufacturing PMI, which measures activity in the services and construction sectors, also increased to 50.2 from 50.1 in the previous month, the NBS reported.
Separate data released by the NBS on Saturday detailed a divergence in industrial profits. Sectors related to upstream production, artificial intelligence, and renewable energy reported profit gains. In contrast, downstream manufacturers faced pressure, which reports linked to levels of domestic demand.
Other economic indicators for May showed that retail sales fell for the first time in over three years and that new home prices declined at an accelerated pace.
A report from China Beige Book, a private research firm that surveys Chinese businesses, suggested a potential recovery in June following two months of slower growth, noting rebounds in both manufacturing and retail sales.
Analysts have commented on the divergence between China’s export performance and its domestic economic activity.
“The hope of rebalancing is dashing,” said Helen Qiao, an economist for China at Bank of America Global Research, in a note that cited stronger exports and weaker domestic demand. The bank raised its forecast for China’s export growth for the year to 15 percent. Qiao added that the imbalance between supply and demand could renew downward pressure on inflation in the latter half of the year.
Economists at Goldman Sachs noted that Chinese policymakers have largely refrained from introducing significant economic stimulus measures this year. The firm anticipates incremental support through increased government borrowing in the coming months, while suggesting that further easing could be considered if third-quarter GDP growth does not meet expectations.
The RatingDog manufacturing PMI, a private survey that typically includes smaller, more export-oriented firms, is scheduled for release on Wednesday. The forecast for the index is a reading of 51.6, a slight decrease from 51.8 in May.
