China factory growth ebbs as export orders shrink
BEIJING — Growth in China’s manufacturing sector cooled slightly in June as firms faced rising input costs and a decline in export orders amid an escalating trade dispute with the United States, a private survey showed on Monday.
The Caixin/ Markit Manufacturing Purchasing Managers’ index (PMI) declined to 51.0 in June from May’s 51.1, matching economists’ forecast.
It remained above the 50-point mark that separates growth from contraction for the 13th consecutive month.
A sub-index for output rose to a four-month-high 52.1 in June, though new order growth slowed and companies chose to sell down existing inventories instead of restocking.
The survey showed new export orders contracted for the third straight month and the most in two years, though there was no significant slide from the previous two months.
China faces escalating trade tensions with the United States, its largest export market, adding to uncertainty about the manufacturing sector at a time when domestic demand also appears to be cooling.
Economic data in May showed China’s economy is finally slowing, with weaker credit growth and a tighter liquidity environment hurting investment in local government building projects, which have helped boost the industrial sector.
This week the US and China are set to impose new tariffs on each other’s imports, with both sides threatening to up the ante if the other doesn’t back down.
Investors have punished Chinese stocks and the yuan currency since the trade dispute intensified over the last month, with the yuan taking a battering against the dollar in June and domestic stocks tumbling the most in a month since January 2016.
For now, though China’s factories appear to have maintained solid overall growth, despite the government’s war on industrial pollution, a slowing housing market and a tightening funding environment. —