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China manufacturing landscape in June 2021 - A total report

1. China’s manufacturing softens in June amid export weakness

According to AP news, Growth in China’s manufacturing activity softened in June as export demand weakened and producers struggled with supply bottlenecks, a survey showed Wednesday.

The national statistics agency's monthly purchasing managers’ index and an industry group declined to 50.9 from May’s 51.0 on a 100-point scale on which numbers above 50 show activity increasing.

Measures of new export orders, production and factory gate prices declined.

“The latest surveys suggest that growth softened this month,” Julian Evans-Pritchard and Sheana Yue of Capital Economics said in a report. Supply shortages “continued to hold back output in the manufacturing sector.”

China’s factory output and consumer spending have rebounded to above pre-pandemic levels but export demand is uneven as governments fight outbreaks of the new coronavirus variant.

Companies “still expect to be cautious,” economist Zhang Liqun said in a statement issued by the China Federation of Logistics & Purchasing along with the PMI reading.

An index of production declined to 51.9, down 0.8 points from May. New export orders fell by a similar margin to a one-year low of 48.1. That was offset by stronger domestic demand, which pushed up the measure of new orders by 0.2 points to 51.5.

2. China’s factory activity growth slows slightly in June

CNBC shows that "The world’s second-largest economy has largely recovered from disruptions caused by the Covid-19 pandemic, but Chinese manufacturers are grappling with new challenges from higher raw material costs to global supply chain bottlenecks.

An outbreak of coronavirus infections in China’s major export province of Guangdong has also disrupted shipments.

On Wednesday, factory output in South Korea and Japan showed unexpected signs of slowdown due to production disruptions in the auto sector from chip shortages."

3. China’s Manufacturing Holds Firm With Price Pressures Easing

“Manufacturing sector growth may remain stable into the second half, supported by strong external demand while the service sector recovers gradually,” said Peiqian Liu, an economist at Natwest Group Plc. “China will need to accelerate its vaccination progress in order to reopen the economy further.”, forecasted by Bloomberg

Supply chain problems are weighing on manufacturing, with recent computer chip, coal and power supply shortages hitting output in some industries, the NBS said. The production sub-index and new order sub-index for vehicle manufacturing contracted for two straight months, a reflection of the negative impact the chip shortage is having on the sector.

A bright spot in the survey was the easing in price pressures, with both input and output prices of manufacturers falling significantly, suggesting the government’s measures to increase the supply of some commodities and steady prices are starting to work.



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