China’s factory and service activities bounced back to expansion range in June after three months of contraction as the recent COVID-19 flare-ups ease and stimulus policies have been implemented to shore up the economy.
The purchasing managers’ index (PMI) for China’s manufacturing sector came in at 50.2 in June, up from 49.6 in May, while the non-manufacturing PMI in June improved to 54.7 from 47.8 in May, data from the National Bureau of Statistics (NBS) showed Thursday.
A reading above 50 indicates expansion, while a reading below 50 reflects contraction.
“As the epidemic prevention and control situation in China continues to improve and a package of policies and measures to stabilize the economy are taking effect at a faster pace, China’s overall economic recovery has picked up speed,” NBS senior statistician Zhao Qinghe said.
Indexes for production and new orders all bounced back to expansion range as the work resumption accelerated.
The sub-index for production stood at 52.8 percent in June, up 3.1 percentage points from the previous month, and the sub-index for new orders stood at 50.4 percent, up 2.2 percentage points from May.
The rebound of manufacturing and service PMI indexes in June, underscored an accelerated recovery of domestic economic activity and stronger demand after the epidemic was effectively brought under control in China in June, Zhou Maohua, a macroeconomic analyst at Everbright Bank told the Global Times on Thursday.
With policies and measures implemented to the smooth delivery of logistics, enterprises saw their delivery time significantly shorter than last month as a supplier delivery time index came in at 51.3 in June, 7.2 percentage points higher than May.
Industries including automobiles, equipment manufacturing, communication and electronic equipment recovered at a faster rate.
Thursday’s data also showed that the PMI for China’s non-manufacturing sector came in at 54.7 in June, picking up for two consecutive months and up 6.9 percentage points in May, boosted by a strong recovery in the service sector.
Sectors that were hard hit by COVID including railway transport, air transport, accommodation, catering, culture and entertainment industry have caught up with previously pent up demand.
In a latest move, China has announced the removal of marking for COVID-hit regions on visitors’ travel code starting Wednesday and Shanghai also resumed dine-in service from Wednesday as the epidemic in the city has brought under control.
Past experience shows that when the epidemic is brought under control, service sector activities tend to rebound strongly. The relief policies targeting transport, tourism, catering are expected to further boost the service sector, Zhou said.
Experts predicted that China’s manufacturing and service activities are expected to stabilize above the expansion range in coming months, pinning hope for a strong economic rebound in the second half of the year.
In order to stabilize growth China has mounted a full-fledged battle to stabilize its economy, as all levels of governments – from the State Council, China’s cabinet, to ministries to local governments – raced to implement a sweeping set of 33 measures aimed at tackling specific challenges and keeping economic activity within in reasonable range.
As previous economy stabilizing policies have been enforced and taken effect, more stimulus targeted at consumption are expected to follow in the second half of year, supporting an accelerated comeback infrastructure investment and consumption which will drive industrial production, Wu Chaoming, deputy head of the Chasing Research Institute told the Global Times on Thursday.
PMI Photo:VCG
