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China factory activity declines in June, signaling economic warning

Posted on July 5, 2024 |

China's factory activity declined for the second consecutive month in June, indicating economic weakness in a critical sector.

The official manufacturing purchasing managers' index (PMI) remained unchanged at 49.5, meeting economists' expectations and reflecting stagnant conditions.

Weak demand led to a decline in overall new and export orders, with readings of 49.5 and 48.3, respectively.

The non-manufacturing PMI, covering construction and services, fell to 50.5 in June, below the forecast of 51 and down from May's 51.1.

China's economic performance has been uneven this year, with manufacturing showing resilience amid sluggish consumption affected by a prolonged real estate downturn.

Continued contraction in the factory sector poses a challenge to China's economic growth target of around 5% for the year.

Trade tensions with major markets like the US and EU add to China's economic challenges, particularly regarding subsidies and potential tariffs on sectors such as electric cars.

The construction index dropped to 52.3 in June, from 54.4 in May, marking its weakest reading since July 2023.

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