Official PMI Announced by China's National Bureau of Statistics Stands at 49.7, Indicating Contraction
Global Investment Banks: "Survey Targets and Timing Differ"
A private survey has found that China's manufacturing sector rebounded in June, following the halt of the US-China tariff war. This result contrasts with the data from China's National Bureau of Statistics, which indicated that the country's manufacturing sector contracted for three consecutive months through June.
According to Chinese financial information provider Caixin and Bloomberg News on July 1, the Caixin Manufacturing Purchasing Managers' Index (PMI) for June recorded 50.4, up from 48.3 in the previous month. This figure is higher than the average forecast of 49.3 by experts surveyed by Bloomberg, and it also surpassed the benchmark line of 50.
The PMI, which is compiled based on surveys of corporate purchasing managers, serves as an indicator of economic trends. A reading above 50 signals economic expansion, while a reading below 50 indicates contraction. The Caixin Manufacturing PMI had fallen below the benchmark in May, entering contraction territory for the first time in eight months due to the aftermath of the US-China tariff war, but returned to expansion after just one month.
US business news channel CNBC highlighted that this private survey result differs from China's official PMI report, which showed manufacturing activity contracting for three consecutive months. The official Manufacturing PMI for June, released the previous day by the National Bureau of Statistics, stood at 49.7, remaining below the benchmark of 50 for the third consecutive month. However, this was a 0.2-point increase from the previous month's 49.5, indicating a recovery trend.
Andrew Tilton, Chief Asia-Pacific Economist at Goldman Sachs, stated in a report on July 1 that the rise in the Caixin PMI reflects a "delayed response to the US-China tariff easing measures announced in mid-May."
Chief Economist Tilton explained that this discrepancy is due to differences in survey timing and the types of companies surveyed. The official Chinese PMI surveys more than 3,000 companies, mostly in upstream (raw material-focused) industries, whereas the Caixin PMI targets around 500 export-oriented private companies. The official survey is conducted at the end of the month, while the Caixin survey takes place in the middle of the month, resulting in different survey periods.
According to CNBC, Caixin, and S&P Global, the rise in the Caixin PMI in June was attributed to an expansion in production. This was analyzed as being due to improved trade conditions and promotional activities that led to an increase in new orders. In particular, the production growth rate was the fastest since November of the previous year.
However, CNBC added that new export orders continued to decline for the third consecutive month in June, suggesting potential headwinds for exports in the second half of the year. It was also confirmed that business owners remain cautious, as the employment situation in the manufacturing sector is still sluggish.
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