ZCZC
BCN-04
CHINA-MANUFACTURING
China manufacturing activity slows in June
BEIJING, June 30, 2018 (BSS/AFP) – Chinese factory activity slowed in
June, dropping from an eight-month high the previous month official data
showed Saturday, missing expectations as the world’s second largest economy
faces the prospect of a trade war with the US.
The Purchasing Managers’ Index (PMI), a key gauge of factory conditions,
came in at 51.5 in June, decelerating from 51.9 in May, the National Bureau
of Statistics (NBS) said.
The number was below the 51.6 reading tipped in a Bloomberg News survey of
economists.
Although the numbers indicate a slowdown, they held comfortably above the
50-point mark that separates expansion from contraction and were higher than
the NBS’s average reading of 51.3 for the first half of the year.
The declining figures come as trade tensions with the US have cast a
shadow on China’s export-oriented manufacturing sector, with both sides
threatening potentially damaging tariffs on billions of dollars worth of
goods.
Nevertheless, “the manufacturing industry’s fundamentals are on the whole
trending positive,” NBS analyst Zhao Qinghe said in a statement, adding that
“manufacturing and demand are expanding at an overall steady pace.”
While large-scale enterprises continued to expand in June, small and
medium-sized businesses are experiencing contraction, he noted, with both
groups dropping below the 50 point mark.
Activity at small and medium-sized businesses dropped 0.2 to 49.8 and 1.1
points to 49.9 respectively, he said.
Last Sunday, China’s central bank said it would reduce the reserve
requirement ratio for most banks in an effort to free up funding for small
firms.
The move will not necessarily pay off, however.
“Looking ahead, we see increasing headwinds to the economy in the second
half of the year from slowing credit growth,” Capital Economics said in a
research note, adding that the risk of a China-US trade war is “adding to the
uncertainty.”
BSS/AFP/HR/0950