Output in China rises at quickest rate for four months in June
Staff Writer |
China’s manufacturing sector expanded further in June, with companies registering sustained increases in output and new orders.
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That said, demand from overseas remained subdued, as new export sales fell for the third month running.
At the same time, optimism towards the year ahead fell to a six-month low, while employment declined at the quickest pace since July 2017.
Inflationary pressures picked up at the end of the second quarter, with input costs and output charges rising at the fastest rates in five and 11 months respectively.
The headline seasonally adjusted Purchasing Managers’ Index (PMI) – a composite indicator designed to provide a single-figure snapshot of operating conditions in the manufacturing economy – fell fractionally from 51.1 in May to 51.0 in June, to signal a further marginal improvement in operating conditions.
The health of the sector has now strengthened in each of the past 13 months, with the latest improvement broadly in line with the historical trend.
June survey data signalled a further increase in Chinese manufacturing production, with the rate of growth edging up to a four-month high.
That said, the pace of expansion remained moderate overall.
Supporting the latest upturn in production was a sustained rise in new business.
As was the case for output, the rate of growth was moderate and similar to those seen in the prior two months.
In contrast, new export sales fell for the third month in a row amid reports of subdued foreign demand.
Manufacturers signalled a further reduction in workforce numbers during June.
Anecdotal evidence indicated that lower headcounts were due to retirements, company downsizing policies and insufficient workloads.
Notably, the rate of job shedding was the steepest seen for 11 months.
Reduced payrolls meanwhile contributed to a further modest rise in backlogs of work.
Increased production needs led firms to expand their purchasing activity again in June, albeit to the weakest degree in three months.
At the same time, firms exhibited a relatively cautious approach to their inventory levels, with stocks of both purchased and finished items declining at the end of the second quarter.
Low stock levels among vendors and strict environmental policies led to a further deterioration in supplier performance in June.
The rate of input price inflation picked up to the sharpest in five months in June.
A number of monitored firms commented on rising raw material costs, including items such as steel.
As a result, manufacturers raised their prices charged, and at the steepest rate since last September.
Finally, goods producers in China remained optimistic that production levels would rise over the next year.
However, the level of positive sentiment was the lowest recorded for six months, amid concerns of rising costs and stricter environmental policies. ■