China’s manufacturing sector growth softened in June as output and new orders growth slowed due to an uptick in COVID-19 cases and supply chain difficulties, data from IHS Markit showed on Thursday.

The Caixin manufacturing Purchasing Managers’ Index fell to a 3-month low of 51.3 in June from 52.0 in May. The reading was below economists’ forecast of 51.8. However, a score above 50.0 indicates expansion in the sector.

Production grew at the slowest pace since March and total new business grew at a slower rate in June. New export work was broadly stagnant in June.

Data signaled a slower increase in purchasing activity due to the lack of stock at vendors and logistical delays related to the pandemic.

On the employment front, the survey showed that manufacturers added to their workforce numbers again in June. Though marginal, the rate of job creation was the second strongest since January 2013.

At the same time, backlogs of work rose for the fourth month in a row, though the rate of accumulation was only slight.

Inflationary pressures eased in June. The rate of input price inflation softened to a seven-month low. At the same time, prices charged by manufacturers rose at the slowest rate since February.

Business confidence towards the year-ahead outlook for output remained strong in June. But the degree of optimism was unchanged from May’s four-month low.

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