June PMI of manufacturing plunges to 50.9 in China

The key gauge of manufacturing PMI (Purchasing Managers’ Index) China registered a dip of 50.9 in June 2021. In the last month, it was 51. This is because the production got slowed due to the poor power supply, which halted the production. The official data released on Wednesday exhibited the facts. The reading was clocked above the expectation of the market forecast carried by Nomura, which was 50.7. 

The NBS’s (National Bureau of Statistics) Zhao Qinge said that the PMI of manufacturing might have slipped by 0.1 per cent, but it was following the expansion zone. That displayed that manufacturing was showing steady growth. 

Notably, any reading beyond 50 is an indication of activities expanding. However, the reading less than that is contradictory. The manufacturing PMI has remained above 50 for a record sixteen months without a miss. 

The chief China economist at Nomura, Lu Ting said that moderation resulted from a drop in the production subindex. The rebound of new orders and employment subindices also triggered it more than offset, she added. 

In June, the production subindex dropped to 51.9. It was lower than 0.8 percentage points compared to 52.7 in May. Zhao said that the shortages of coal, chip and power supply lead to the situation. The chief economist of Hang Seng Bank China, Wang Dan, believed that the supply shortage would continue until the end of the year. Moreover, the global shortage of chips and other industrial inputs would put a bar on the production growth of the nation. 

Wang noted that the resurgence of COVID-19 in major Asian countries, including India, has now led to global demands relies on China for meeting the supplies. However, China’s supply issues can be resolved once other Asian countries recover to the full capacity of their production capacities. He sounded optimistic estimated better performance the next year. 

The subindex of new orders hiked to 50.5 in June in comparison to May, which was 51.3. However, the new export subindex in May was 48.3, which slipped to 48.1 in June. 

The slip indicated the weaker sequential momentum, as per Lu. It would have been caused due to congestion at South China ports.

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