Optimism towards future output growth in China remains stable in June
Staff Writer |
Chinese companies are optimistic that output will increase over the next year, according to the latest IHS Markit Business Outlook survey.
Article continues below
However, the net balance of companies anticipating growth (+19%) is unchanged from those recorded in the prior two survey periods, to suggest that sentiment remains relatively subdued.
Notably, optimism towards future business activity is the joint-weakest globally.
Data broken down by sector indicate similar levels of confidence across both the manufacturing and service sectors.
However, growth projections at services companies have edged down from February to the lowest since October 2016.
Optimism has been attributed to new product releases, forecasts of rising client demand, efficiency improvements, supportive national policies and expectations that increased investments will expand operating capacities.
At the same time, companies have cited a number of threats to the outlook.
Projections of rising input prices (particularly for raw materials), higher labour costs, tough market competition, strict environmental policies and concerns over potential global trade wars and tariffs are all seen as key issues that may weigh on future growth.
Although the level of positive sentiment towards new business remains relatively lacklustre, the net balance of companies anticipating an increase in new orders has edged up to the highest since early-2017.
Hiring intentions across China have softened in June, with the net balance of firms expecting to raise their workforce numbers dipping to the lowest in nearly two years.
Notably, manufacturers anticipate job shedding for the first time since October 2016, while service providers have scaled back their hiring plans compared to February.
Although businesses anticipate capex to increase in 12 months’ time, the overall level of sentiment is down to a one-year low.
Sector data indicate that both manufacturers and service providers foresee slower growth in capex, with the latter at their least upbeat in the survey history.
Companies in China expect an increase in cost burdens in the year ahead.
The net balance of firms forecasting inflation has edged up slightly since February, but remains the lowest of all 12 nations for which comparable data are available.