Growth in Chinese factory activity slowed to a four-month low in June, amid a resurgence of COVID-19 infections in several major export provinces, including Guangdong. Official manufacturing Purchasing Manager’s Index (PMI) in June inched down to 50.9 against 51.0 in May, as per the National Bureau of Statistics. An index above 50 still signifies expansion.
In the month, port operations were impacted. The manufacturing sector also faced other challenges like increased raw material costs, logistic challenges, and a shortage of semiconductors, especially in the auto sector, leading to closures of auto plants in Asia.
Consumption and demand, however, are rising and could lead to an improved PMI in July.
According to CFLP Steel Logistics Professional Committee (CSLPC), China’s PMI for its steel industry was at 45.1 in June, down by 1 basis point from May. Domestic steel demand was slow while steel production kept growing. Chinese steel inventories continued to pile up with the concerns over policy tightening and production curbs easing. Export orders fell for the second month amid rising infections in several other Asian countries.
Amid the government’s effort to control prices, a sub-index for raw material costs in the official PMI stood at 61.2 in June, compared with May’s 72.8. While the construction index held steady at 60.1.