PMI for June comes in at 49.4, but might rebound: analyst
China’s manufacturing sector remained unchanged on a monthly basis in June, showing that the sector stabilized after a slide in May, official data showed on Sunday.
One expert suggested that the positive turn in the China-us trade relations should drive up domestic manufacturing in the next few months.
The official manufacturing purchasing managers’ index (PMI) came in at 49.4 in June, the same as in May, according to data from the National Bureau of Statistics released on Sunday.
The reading dipped by 0.7 points in May compared with 50.1 in April.
Liu Xuezhi, an economist at the research center under the Bank of Communications, told the Global Times on Sunday that judging by the figures, the manufacturing sector remained “weak” as a result of sluggish demand at home and abroad.
The Bank of Communications’ research team had forecast the June PMI would come in at 49.8.
But Liu said that the PMI should rebound in the next few months as the China-us trade tensions are expected to come down as the two governments have agreed to restart their talks.
Top leaders from China and the US reached an agreement during the just-concluded G20 summit in Osaka, Japan to restart their trade consultations, and the US side said it won’t impose new tariffs on imports from China, Xinhua reported.
According to Liu, domestic tax reduction policies that were implemented from April will also help boost market confidence.
But he cautioned that an above-50 PMI reading is still “not easy to achieve”.
Yang Chang, an economist at the research center under Zhongtai Securities, told the Global Times on Sunday in a statement that the short-term PMI contraction in recent months might push the elimination of backward capacity.