China: Discouraging prints from PMIs in June – UOB

Economist at UOB Group Ho Woei Chen, CFA, reviews the latest release of Chinese PMIs for the month of June.

Key Takeaways

China’s CFLP manufacturing and non-manufacturing PMIs were largely in line with estimates and continued to show a worrying trend of growth moderation in Jun. The disinflationary pressure has also persisted in the broader economy. 

The manufacturing PMI stayed in contraction (reading below 50) for the third consecutive month in Jun but edged up slightly by 0.2 points to 49.0.

The non-manufacturing PMI remained in expansion but moderated for the third consecutive month as it fell 1.3 points to 53.2, contributed by slower activities in both the services and construction industries.

Sentiment has remained weak as any additional stimulus measures from the Chinese government and central bank will likely be restrained. The Politburo meeting in Jul is seen as a probable timing for further stimulus announcement which Premier Li Qiang said will be “more practical and effective measures” on expanding domestic demand and stimulating market dynamism.