Industry growth outstrips forecasts

DOMESTIC manufacturing activity expanded faster than expected in June despite lingering economic headwinds, a private report said yesterday.

The Caixin China General Manufacturing Managers’ Index returned to the positive territory at 50.4, the highest in three months, according to the survey conducted by financial information services provider Markit and sponsored by Caixin Media Co. Ltd.

That compared with May’s 49.6 and market expectations for 49.5 according to a Reuters poll.

A reading above 50 indicates expansion, while a reading below that reflects contraction.

New orders rose the fastest in three months.

Input and output prices both showed renewed increases although the inflation was cooler than the beginning of the year.

But relatively muted demand overall led manufacturers to reduce their inventory and trim their workforces again.

Optimism on the business outlook edged down to its lowest this year, the report said.

“The manufacturing sector recovered slightly in June, but based on the inventory trends and confidence on future output, the June reading was more like a temporary rebound, with an economic downtrend likely to be confirmed later,” said Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group. The improvement in Caixin PMI echoed a pick-up of official PMI data of 51.7 in June, up from May’s 51.2.