China’s factories gain momentum in June

By Nada Ali On Jul 1, 2024

Employees work at a factory in the Shanghai Lingang Industrial Park in Shanghai, April 20, 2012. China's factories stabilised in April as output ticked higher, new business rose from multi-month lows and export orders perked up, though not sufficiently for a private sector survey of purchasing managers to flag a return to expansionary territory. Picture taken April 20, 2012.

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

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