China’s factories gain momentum in June

China’s manufacturing sector grew at its fastest rate in two years in June, with a Purchasing Managers’ Index (PMI) of 51.8, up from 51.7 in May.

The increase in new orders, especially for consumer goods, drove a positive trend. Production output reached a 24-month high, led by the consumer goods segment.

Manufacturers’ new product launches and market development efforts fueled this growth. Although export orders continued to grow, the pace slowed compared to May.

Purchasing activity also rose significantly, driven by the need to support production growth. This resulted in a slight increase in finished goods inventory.

However, there are some concerns amidst the positive developments. Delivery times for suppliers lengthened for the first time since February, albeit marginally. Input material shortages and delivery constraints were cited as reasons for these delays.

This, coupled with rising raw material prices, led to a two-year high in input cost inflation. Companies responded by raising selling prices for the first time in six months, with the increase being the strongest in eight months.

While sentiment in the sector remains positive, it has dipped to its lowest level in over four and a half years. Manufacturers are concerned about rising competition and uncertain market conditions, potentially dampening future growth prospects.

Attribution:PMI by S&P data