China June Caixin Manufacturing PMI comes in at 50.5

  • expected 50.2
  • prior 50.9

Last week we had the official PMIs, and manufacturing remained stuck in contraction:

China has two primary Purchasing Managers' Index (PMI) surveys - the official PMI released by the National Bureau of Statistics (NBS) and the Caixin China PMI published by the media company Caixin and research firm Markit / S&P Global.

While the NBS' PMIs cover large and state-owned companies, the Caixin PMI survey covers more small and medium-sized enterprises. As a result, the Caixin PMI is considered to be a more reliable indicator of the performance of China's private sector. Another difference between the two surveys is their methodology. The Caixin PMI survey uses a broader sample of companies than the official survey. Despite these differences, the two surveys often provide similar readings on China's manufacturing sector.

In brief from the S&P Global report:

  • Both manufacturing supply and demand improved only slightly in June.
  • demand growth remained restrained
  • Growth stemmed largely from the domestic market, while overseas demand remained more or less stable amid the global economy’s ongoing sluggishness
  • The manufacturing job market continued to deteriorate. The employment subindex came in well below 50 in June, although it bounced back from a more than three-year low in May.
  • Prices continued to plunge, with the readings for input and output prices both coming in significantly below 50 for the third straight month.
  • Supplier delivery times improved further in June.
  • “A slew of recent economic data suggests that China’s recovery has yet to find a stable footing, as prominent issues including a lack of internal growth drivers, weak demand and dimming prospects remain. Problems reflected in June’s Caixin China manufacturing PMI, ranging from an increasingly dire job market to rising deflationary pressure and waning optimism, also point to the same conclusion. In the future, stronger policy support is needed on the macro level, along with higher implementation efficiency from a micro perspective, to ensure that policies benefit market players directly and therefore bolster employment and market expectations.”