The China manufacturing sector in contraction again

Factory activity in China remained in contraction for a second consecutive month in June, adding to difficulties facing the world’s second-largest economy ahead of next month’s key third plenum.

The official manufacturing purchasing managers’ index (PMI) – a survey of sentiment among factory owners – stood at 49.5 in June, unchanged from May, according to data released by the National Bureau of Statistics (NBS) on Sunday.

Within the official manufacturing, the new manufacturing export order subindex, meanwhile, remained unchanged at 48.3 in June.

A reading above 50 typically indicates expansion of activity, while a reading below suggests contraction.

Readings of the subindexes gauging new orders, raw material inventory and employment also remained below 50, while that for suppliers’ delivery times fell to 49.5 from 50.1 in May.

Only the production subindex remained above the watershed level of 50, but still dropped to 50.6 from 50.8 – indicating slowing manufacturing expansion.

“In terms of output, China’s economy overall remains in expansion, but the foundation for sustained and improved recovery still needs consolidation,” senior NBS statistician Zhao Qinghe said.